The effect of corporates? ownership structure on financial decisions in the agency theory perspective: application in ise

In this study, the effect of companies? ownership structure on companies? fundamentaldecisions is examined. The concept of ownership structure is proxied by ownershipconcentration and ownership identity and the fundamental financial decisions contain capitalstructure decisions, dividend decisions and investment decisions.162 companies, are traded in İstanbul Stock Exchange Market (ISE) between 2002-2010period, were chosen to examine relationship between companies? ownership structure andtheir fundamental financial decisions. Three models were founded for each fundamentaldecision. Panel data analysis was applied to investigate these models. Dependent variablesrepresenting the capital structure decisions are total debt/total asset ratio, short term debt/totalasset ratio and long term debt/total asset ratio; dependent variables representing the dividenddecisions are total dividend payment, cash dividend/market capitilization ratio and dividendyield; dependent variables representing the investment decisions are tangible fixed assetsinvestment, tangible fixed assets investment/sales ratio and tangible and intangible fixedassets investment in the models. Independent variables representing the ownership structure isshare of largest shareholder, share of other (second) largest shareholder, dispersed ownership,managerial ownership, state ownership, holding ownership, institutional ownership, foreignownership, foundation ownership and family ownership in the models.Ownership structures can not be expressed in a single component, and ownership structureleads to different effects on corporate fundamental decisions as a result have a large numberof indicators of ownership structure. An overall evaluation of the results obtained, largestshareholder which is one of the indicators of the ownership concentration affects allfundamental decisions, This effect is positive on capital structure decisions and investmentdecisions, negative on dividend decisions. The other ownership variable that affects all thefundamental decisions is managerial ownership which is one of the indicator of ownershipidentity. Managerial ownership positively affects capital structure decisions and investmentdecisions, on the other hand negatively affects dividend decisions. In addition, each indicatorsof ownership structure have different impact on corporate fundamental decisions, these effectsare discussed in the study.Key Words: Ownership Structure, Ownership Concentration, Ownership Identity,Capital Structure Decisions, Dividend Decisions, Investment Decisions.