The determinants of capital structure: An investigaton on Turkish manufacturing sector

The capital structure is a critical decision for the sustainability of the company's activities and a financial factor that takes shape according to the results of the company's activities. This study investigates how and to what extent firm-level factors affect the capital structures of sub-sectors connected to the main manufacturing sector operating in Turkey. For this purpose, we applied panel data analysis using of financial data of 24 manufacturing sub-sectors between 2009-2019 by using the sector balance sheets created within the framework of the CBRT-TSI cooperation. According to the study results, while liquidity and asset structure ratio negatively affect the total leverage, export intensity affects positively. While profitability and growth opportunities affect the long-term leverage ratio negatively, liquidity, size, asset structure, and export intensity affect positively. Meanwhile, liquidity and asset structure negatively affect the short-term leverage ratio, profitability affects it positively. We can assert that the asset structure and profitability variables, which are between the variables used in the created models, are the variables that most affect the level of debt using of companies. As a result, we determined that the manufacturing sector act under pecking order theory and trade off theory approaches in their capital structure preferences. We consider that the study results will be substantial for policymakers, financial analysts, investors, and researchers. Keywords: Financial Structure, Liabilities, Capital Structure Theories, Panel Data Analysis, Manufacturing Sector Balance Sheets