The effect of financial decisions on firm value and profitability: A panel data analysis on the manufacturing companies listed on the BİST

The financial management decisions consist of; capital structure, working capital, capital budgeting and dividend policy steps which shall increase the stock value and profitability of business entities. The finance managers shall decide financial management decisions on balance to protect both shareholders and stockholders. The aim of this thesis is to investigate firm value and profitability determinants of financial management decisions. For this purpose, 64 industrial companies were chosen which have been listed on the İstanbul Stock Exchange which have available financial ratio and dividend cash payment anounces completely in the period of 2003-2012. Panel data regression analysis is used for testing the hypothesis empirically. The independent variables have been chosen keeping in view literature, capital structure, working capital and dividend policy models. Results of analysis show that, company profitability and value of Turkish manufacturing companies have negative relation with capital and fixed asset structure; while positive relation is proved with cash dividend payment, turn over ratios, asset growth rate and liquidity ratios. It's also observed that sales growth, paid tax rate, size, commercial debt turn over ratio have no significant effect on company profitability and value. Capital structure, liabilities are the determinants and also macro economic, regional and political conditions effect dividend policies. Manufacturing enterprises sustained short term liabilities increasingly in this period. Established theories trade-off and pecking order theories fail to explain adequately the analysis results because money and capital markets are still not deep as much as developed countries in Turkey. On the other hand financial distress and agency costs are much more adequate to explain the analysis results. Key Words: Financial Management Decisions, Panel Data, Manufacturing Industry