Analysis of the factors that affect capital structures of turkish lodging companies

Lodging companies invest in fixed assets, intensively on wide lands and estates during investment period. Thus, they are referred to as capital intensive companies. Moreover, since lodging companies are sensitive to systematic risks, their financial and business risks are at high levels. As a result, determining capital structure composition and determinants of financing decision in lodging companies are important issues. The aim of this thesis is to evaluate the deteminants of capital structures and financing decision of Turkish lodging companies. We also examine which capital structure theory is useful in explaning the capital structures of Turkish lodging companies. First capital structure of Turkish tourism sector between 1990-2006 years is investigated by using tourism sector balance sheets published by Central Bank of the Republic of Turkey. Second, the variables that affect the capital structure decisions of Istanbul Stock Exchange (ISE) lodging companies are investigated by using dynamic fixed effects panel analysis and fixed effect estimation models for the time periods 1994-2006 and 2000-2006. Although analysis results reveal that neither trade-off nor pecking order theory seem to exactly explain the capital structures of Turkish lodging companies in the ISE, pecking order and trade-off theories appear to unveil the capital structures of Turkish lodging companies in terms of variables. Third, a survey is used to examine the determinants of capital structure decisions of no quoted on ISE lodging companies. Findings of this survey suggest that capital structure decisions of lodging companies, which are no quoted on ISE, are in line with pecking order theory.Key Words: Capital Structure, Trade-off Theory, Pecking Order Theory, Lodging Companies, Turkey.