Investigation of the factors that affect capital structure decisions of manufacturing industry: An application in Adana Hacı Sabancı Organized Industrial Zone

Capital structure decisions remain one of the most controversial issues in finance literature. Many theories have been developed on this topic. But there is not clear which theory exactly explains capital structure decisions. The purpose of this study, how firms choose their capital structure decisions are analyzed. At the same time, which theory is fit with the firm attitude in real life is evaluated. This study is based on survey results from 112 firms in the manufacturing industry, located in Adana Hacı Sabancı Organized Industrial Zone. According to the survey, firms do not have a targeted spesific dept ratio and internal funds are the first choice by the shareholders. External funds are used only when internal funds are insufficent and securing financial flexibility has importance on corporate dept decisions. The firms have a policy of maintaining spare dept capacity and do not borrow more at the same interest rate. For the results which derived from this study, in general, firm attitudes are fit with pecking order theory. Trade-off theory does not provide any supportive results other than market interest rate is important factors to borrowing.Key Words: Funding Sources, Capital Structure, Target Dept Ratio, Pecking Order Theory, Trade-off Theory.