Financial distress in companies and financial restructuring: A case study in Turkey

Many studies and researches have been made regarding value effects of the public announcements about financial restructuring applications of distressed companies. Whether market shows a reaction to the announcements about financial restructuring applications is one of the controversial issues of finance literature. The purpose of this study is to examine impact of public announcements about financial restructuring applications on equity returns (firm value) of the distressed company. In this study ?Event Study? method is applied and one Turkish firm from textile sector has chosen for the particular case study that financial analysis based on detailed quantitative data. Cumulative Abnormal Return-CAR model is used in order to measure impact of public notifications to the equity values. Results of the study have shown that market generally has positive reaction to public announcements and equity return performs higher than market return (IMKB 100 index) in general during those periods.