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The Impact of Ownership Structure on Capital Structure of Manufacturing Firms: Evidence from the ISE (1998-2009)

Guven Sayilgan and Yahya Sayman

Istanbul Stock Exchange Review, 2012, vol. 12, issue 48, 1-12

Abstract: In this study, the impact of capital structure on firms’ ownership structure is examined. Therefore, manufacturing firms whose stocks are quoted on the Istanbul Stock Exchange (ISE) over the period 1998 and 2009 are covered using pooled data. On the developed model, it was investigated how ownership structure is affected by the capital structure. According to the results of the regression model, it has been found that firms which have less shareholders choose higher-risk capital structures because of increasing firm value. Furthermore, provided that capital intensity becomes higher, firms must hire professional managers. In this instance, professional managers prefer equity financing for preventing financial distresses. In summary, this study concludes that firms’ ownership structure affects capital structure.

Keywords: Capital structure; ownership structure; agency theory. (search for similar items in EconPapers)
JEL-codes: G32 G39 (search for similar items in EconPapers)
Date: 2012
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Handle: RePEc:bor:iserev:v:12:y:2012:i:48:p:1-12