Impact of financial risk on the market value of businesses: An application in BIST food beverage industry

The chosen master thesis mainly examines the impact of financial risks on the market value of business in 17 food based companies operating in Borsa İstanbul. Financial risk management is beneficial in reducing the negative effects of financial risks on the company; is considered essential in increasing the profitability and competitiveness of the company. Financial risk management activities also incur additional expenses. The benefits of financial risk management are meaningless if the company's financial risk activities outnumber the risk management resources. Credit risk, liquidity risk, currency risk, market risk, and interest rate risk are just a few of the risks that companies are currently facing. To control these risks, a timely and effective financial risk management system is crucially required. As it is one of the most pivotal tasks that should have to be completed once the risk has been identified and exposed. Risk and return are inextricably linked, with higher risk resulting in higher returns and vice versa. Financial risks have a significant impact on the performance of the company. The study analyzed the data from 17 companies in the BIST0 food-beverage sector from 2010 to 2020. In the study, panel data analysis was used. The relationship between credit, financial leverage, and liquidity risks, as represented as financial risks, and the market value/book value ratio, which refers to the value of a company, was investigated. The regression model established in the study was considered vital fo find out clear-cut answers to the emerged questions. Based on the results of the analysis, liquidity risk was necessary, while other financial risks were meaningless for companies within the application.