Abstract:

The first step to be taken for all companies that target sustainable profitability is an debt-equity structure was effective created. In this study, which aims at contributing to the related literature, the firm level factors that affect the capital structure decisions of Turkish manufacturing firms were analyzed in the scope of the Financial Hierarchy and Trade of Theory. In this study, the data that belongs to 50 manufacturing firms uninterruptedly traded in Istanbul Stock Exchange from 1990 to 2014 were analyzed with dynamic panel data method. Accordingly, it was found that while some independent variables such as firm size, asset structure, profitability and current ratio have a negative effect on borrowing, growth rate and growth opportunities have a positive effect on it. The firm risk variable was found as meaningless statistically in all models. As a result, it can be stated that loan behavior of firms is predominantly compatible with Financial Hierarchy Theory