The Relationship between Firm Value and Financial Risks: An Application on BIST Sustainability Index

Ayşegül Ertuğrul, İlknur Külekçi and Mete Bumin

Journal of Research in Economics, Politics & Finance, 2024, vol. 9, issue 1, 213-229

Abstract: Managing financial risks is necessary to protect the value and stability of companies. In this context, revealing the impact of financial risks on firm value is important for company shareholders, managers, and investors. This study aims to examine the relationship between the firm value and financial risks of companies in the BIST Sustainability Index. In this context, the relationship between the firm value and financial risks of the companies in the BIST Sustainability Index, excluding financial sector companies, is analyzed by panel regression analysis (fixed effect model) method based on quarterly data between 2018 and 2022. In the study, market capitalization/book value ratio was determined as the dependent variable representing the firm value; and financial leverage, currency risk, credit risk, and liquidity risk, which were selected as financial risk factors, were determined as independent variables. According to the findings of the study, a significant and negative relationship was found between firm value and financial leverage, while a significant and positive relationship was found between firm value and currency risk and credit risk. No significant relationship was found between firm value and liquidity risk.

Keywords: İşletme Değeri; Finansal Risk; Panel Veri Analizi (search for similar items in EconPapers)
JEL-codes: C23 G32 L25 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ahs:journl:v:9:y:2024:i:1:p:213-229

DOI: 10.30784/epfad.1418132

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