Determinants of capital structure: Evidence from Borsa İstanbul

This dissertation firstly aims to test the hierarchy and trade-off theories for the determinants of capital structure of Turkish firms, and to make a comparison of them with the determinants of capital structures of firms operating in Greece, France, UK, and China. Further, the dissertation aims to investigate the effect of sector type, rate of foreign paid in capital, free float rate, and firm market value on capital structure. The data set used in this research is drawn from financial data of firms operating in Borsa İstanbul, sectorial financial data from Turkey's first 500 manufacturing firms data of İSO-500, and for the other countries, from financial data of publicly traded firms placed in Reuters Eikon dataset. Empirical analysis is held by panel data regressions and graphical analysis. According to the findings of panel data regression, there is empirical evidence that both hierarchy and trade-off theories can describe the capital structure of Turkish firms. Moreover, there are substantial differences between the determinants of capital structure among different countries. The study reveals that sector type has a definite impact on capital structure. Graphical analyses provide evidence that capital structures of all domestic firms and firms with free float rate of %50-%75 are different than those of other groups. Keywords: Capital structure, hierarchy theory, trade-off theory, international comparison,sector type.