Examining the relationship between financial flexibility and financial policies and determining the value contributed to the company by financial flexibility: A research on non-financial companies in Stock Market İstanbul

Financial flexibility, which is an important factor in establishing of the financial policies of companies, provides opportunities for companies to evaluate investment opportunities and becomes a necessity for companies, especially when accessing resources is difficult. In addition, the insufficient development of the financial system around companies that are directly affected by the economic environment they are in, makes resource management difficult and this situation leads companies to financial policy applications based on financial flexibility. The aim of this study is to determine the financial flexibility of companies in the non-financial sectors listed on Borsa Istanbul Stock Market, to examine the relationship between financial flexibility and financial policies consisting of cash assets, capital structure, dividend and capital investments on companies listed on Borsa Istanbul Stock Market and to determine the values it provides to the company. For the purpose of the study, financial flexibility was determined using the reserve debt capacity method obtained from the literature and the value calculation was made with the financial flexibility index. Data of 128 companies actively traded in Borsa Istanbul Stock Market between 2005-2019 were used in the study. The datas were obtained from Borsa Istanbul Datastore and Public Disclosure Platform and analyzed on EViews 10 and Stata 15 programs with static, dynamic and qualitative preferential panel data analysis methods. When the results of the analysis were examined, it was determined that approximately 52% (66 companies) of 128 companies in the non-financial sectors listed on Borsa Istanbul Stock Market had at least one period of financial flexibility during the review period. However, it is seen that firms operating in non-financial sectors at Borsa Istanbul have high cash asset accumulations during the periods when they have financial flexibility, by increasing their capital investments, investments are financed not by internal resources but by reserve debt capacities, it also improves investment performance and they prefer share repurchases along with cash dividend payments and has high portfolio performance in the long term. In the analyzes, it has also been determined that firms with high financial flexibility value decrease their debt ratios and focus on equity while creating their capital structures. As a result, it has been determined that financial flexibility has a significant effect on the financial policies of companies in the non-financial sectors listed on Borsa Istanbul Stock Market and it provides value to companies by increasing the capital investment performance and portfolio investment performance of the companies. With these results, the literature was supported, and the financial flexibility determinations and evaluations made contributed to the literature.