Capital structure and profitability relationships in Turkish manufacturing firms (for periods 1976-1979 and 1982-1986)

Abstract

ABSTRACT In this thesis, the capital structure and profitability relationships in Turkish manufacturing firms far periods 1976-1979 and 1982-1986 are studied. The data used in this study are the balance sheet and' income statement figures obtained from the third volume of Financial Analysis written by Cihangir Sam in and the publishings of Sermaye Piyasasi Kurulu. From this data the variables used in the study are calculated. The following equations are tested for the two time periods by regression analysis: 1. leverage ~ f (profitability, size, growth, risk, asset structure) 2. profitability = g (leverage, growth, sise, market power) We found positive and significant relationship between leverage and profitability for years 1976-1979. This relationship was negative for the years 1982-1986. Regression coefficients of other variables are generally insignificant at a 957. confidence level. There are several limitations faced in this study. First, the sample firms are not selected randomly from a. large papulation, instead they are limited to those that we had at hand. Due to lack of data, not enough firms were gathered to carry this study on an industry basis. Another limitation is that the financial tables used for this study were not prepared with inflationary accounting rules. iv