Capital structure decisions under uncertainty: the case of Turkey

Burcu Dinçergök and Hakkı Ozan Eruygur

Asia-Pacific Journal of Accounting & Economics, 2024, vol. 31, issue 3, 441-456

Abstract: This study analyzes the relationship between uncertainty and target leverage ratios on manufacturing firms listed in Borsa Istanbul between 2005–2020. To handle possible instrument proliferation and weak instrument problems of System GMM methodology of dynamic panel data, we mainly adopted the Quasi Maximum Likelihood estimator and found that uncertainty has a significant negative marginal effect on target leverage ratios. Our analysis revealed that firms with high levels of uncertainty have lower average leverage ratios than other firms. ANCOVA analysis results show that uncertainty is in the first three time-varying variables which have the highest impact on target leverage variation.

Date: 2024
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DOI: 10.1080/16081625.2023.2170894

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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