The effects of financial risk management on firm value: An application in BİST industrials and sub-sectors

Reducing the negative impact of the financial risks to the company is found to contribute how much effect to increase profit and competitiveness of the company is protected important issue among the financial literature. The value of companies is expected to be higher which manage their financial risks effectively. Although there is cost of financial risk management to the company, companies are folding these costs because managing of these risks is due to the significant contribution to the value of the companies. The first phase of managing financial risks that exposed companies, financial risks are determined according to the sectors in which firms operate, economic conjuncture. For determining accurately these risks, it requires investigation that includes many details of the company. Nevertheless, the lack of sufficiently comprehensive accounting records for detailed investigations cause the difficulties experienced in financial analysis and the risks that they are exposed to the wrong determination of the company. The purpose of this study, we want to contribute on the literature at the point about whether it is a meaningful effect of managing the financial risks taken by the company on firm value. In line with this objective as a result of financial analysis applied to eight different sectors, it has investigated whether differences the risks associated with the company as the industry in their impact on firm value. Eight panel data models applied to different sectors, all other sectors except BIST Metal sector were observed to be significant. There is a significant positive relationship between firm value and capital risk for BIST Industrials, BIST Food, beverage, BIST Chem., petrol, plastic, BIST Wood, paper, printing and BIST Non-metal min. product, and also significant positive relationship between firm value and market risk for BIST Metal products, machinery, BIST Wood, paper, printing, and BIST Non-metal min. product. In addition, we found that there is negative relationship between firm vale and liquidity risk for BIST Chem., petrol, plastic, BIST Metal products, machinery and BIST Wood, paper, printing. Keywords: financial risk, firm value, financial return