Determination of financial distress causing internal and external factors in companies on Borsa Istanbul

The main purpose of commercial companies is to maximize market value and be sustainable. Companies try to realize these objectives in harmony with the actors in the economic system. While carrying out their activities, companies may face a number of problems caused by internal or external actors. One of the most important problems that companies are exposed to is financial problems. Financial problems or difficulties experienced by companies have long attracted the attention of researchers. There are quite a number of studies on the subject in the literature. In finance, this issue is described with different concepts. Many of the concepts support each other and have the same meaning. In this study, this concept is referred to as financial distress. Financial distress is defined as the inability of companies to meet their due obligations. More than one factor can be effective in the financial distress of companies. Companies that can not eliminate these factors that cause financial distress may have to terminate their activities. As a result of the inability of companies to continue their existence, certain costs are imposed on the related parties. When financial distress is considered in this context, it is seen to be a very important issue. In order to contribute to the study of financial distress, many studies have been conducted to identify financial distress, to predict financial distress, to reveal the determinants of financial distress and to develop quantitative models to measure financial distress. The aim of these studies is to ensure that companies can continue their existence and to take the necessary precautions against financial distress. This study examines the relationship between financial ratios, which are internal financial distress factors, and macroeconomic variables, which are external financial distress factors, and financial distress. The sample of the study consists of companies in the manufacturing sector of Borsa Istanbul. In this context, 109 companies that are continuously traded on Borsa Istanbul between 2006 and 2022 are identified. In the study, financial ratio data of the companies and data on macroeconomic variables representing the Türkiye economy are used. Eight different financial distress prediction models are included to represent financial distress. A total of 24 different forecasting models are created in the study using the panel data analysis method. When the results of the analysis are evaluated, it is seen that in most of the models, financial ratios as independent variables are more explanatory than macroeconomic factors. This result indicates that financial ratios, which are among the internal financial distress factors, affect the financial distress of companies more.