THE IMPACT OF CAPITAL STRUCTURES ON FIRM PERFORMANCE: EMPIRICAL EVIDENCE FROM BIST BASIC METAL INDEX

Abstract

Numerous different components should be evaluated together and separately, and processes should be managed in this way, to enhance the financial performance of companies, to produce more accurate future projections, and to assist decision-making processes. The main objective of the research in this condition is to ascertain the effects of the capital structure variables (financial leverage, long-term Liabilities/ total assets, short-term Liabilities /total assets, and equity/total assets) on firm performance measures (return on assets, return on equity, and Tobin's q). In this manner, panel data analysis was employed to construct predictions employing data from 17 companies that maintained data continuity over the allotted time. The primary driving forces behind this sector's research are its leading position in Türkiye’s production activities, its profound influence on other industries, and its strategic significance for the nation's economy. Huber, Eicker and White resistive estimator was employed to provide more consistent findings after basic assumption tests were applied to assess the validity of the models described in the research. The findings demonstrate that the Equity/Total Assets Ratio demonstrates statistically significant values in each of the three models. Other factors' effects on performance metrics were found to be insignificant. As a consequence, it has been suggested that market participants might include this information set in their decision-making even if it is noted that there is a link between the performance criteria of the companies and their capital structure preferences.