Determinants of Capital Expenditures: Evidence from Borsa Istanbul

Abstract

The aim of this study is to examine the effect of size on capital expenditures and observe how crises affect the capital expenditures of companies of different sizes. The panel data estimation procedure was mainly conducted to test the hypotheses. To robust the main estimation results, the quintile estimation procedure based on the asset size of each firm/year was employed. Additionally, we re-ran the model for the crisis years. Size, market capitalization, and tangibility positively affect the capital expenditure investments. Operating cash flow increases the capital expenditures with 10% significance. On the other hand, dividend payments reduce the capital expenditures. We observed material differences depending on the size of the companies. Also, our empirical evidence showed that crises affected the variables in terms of significance and coefficients. This paper contributes to corporate finance by providing an insight into the effect of size on capital expenditures from an emerging market. This paper is the first research to investigate how different size levels and crises affected the capital expenditures of Turkish listed companies. The results are also supported by robustness tests