Ali Uyar

Measuring firm performance using financial ratios: A decision tree approach

Determining the firm performance using a set of financial measures/ratios has been an interesting and challenging problem for many researchers and practitioners. Identification of factors (i.e., financial measures/ratios) that can accurately predict the firm performance is of great interest to any decision maker. In this study, we employed a two-step analysis methodology: first, using exploratory factor analysis (EFA) we identified (and validated) underlying dimensions of the financial ratios, followed by using predictive modeling methods to discover the potential relationships between the firm performance and financial ratios. Four popular decision tree algorithms (CHAID, C5.0, QUEST and C&RT) were used to investigate the impact of financial ratios on firm performance. After developing prediction models, information fusion-based sensitivity analyses were performed to measure the relative importance of independent variables. The results showed the CHAID and C5.0 decision tree algorithms produced the best prediction accuracy. Sensitivity analysis results indicated that Earnings Before Tax-to-Equity Ratio and Net Profit Margin are the two most important variables.

Value relevance of voluntary disclosure: evidence from Turkish firms

Purpose – The purpose of this paper is to examine whether or not listed Turkish companies’ voluntary disclosure practices are value‐relevant in the capital market.Design/methodology/approach – The sample consists of 129 manufacturing companies listed in the Istanbul Stock Exchange (ISE) for the year 2010. Data regarding voluntary disclosure level and other variables have been collected by analyzing the contents of annual reports. Through multiple regression analysis, the authors investigated whether or not voluntary disclosure level impacts firm value.Findings – The main finding of the study is that voluntary disclosure is value‐relevant; i.e. impacts firm value. This implies that market participants value voluntary disclosure. The more information firms disclose voluntarily, the higher value they have in the eyes of investors. Therefore, this finding might be accepted as a signal to corporations to disclose more information to the stakeholders. However, the finding varied based on the dependent variable ...

The impact of ownership and board structure on Corporate Social Responsibility (CSR) reporting in the Turkish banking industry

Purpose – The aim of this study is twofold. The first is to analyze the nature, extent and trend of corporate social responsibility (CSR) reporting in the Turkish banking industry under five sub-themes, namely, environment, energy, human resources, products and customers and community involvement. The second is to investigate the impact of ownership and board structure on CSR reporting by the banks. Design/methodology/approach – The annual reports of the banks were examined for the period between 2008 and 2012 to analyze the CSR reporting of the banks, using content analysis and panel data analysis. Findings – The results show that CSR reporting of the banks improved during that period of time. The findings of the study also revealed that there is a significant positive effect of size, ownership diffusion, board composition and board diversity on the CSR disclosure of the banks. Originality/value – This study contributes significantly to the existing literature because the banking industry is generally ex...

Determinants of corporate reporting on the internet

Purpose - The primary objective of this study is to investigate the utilization of the internet by the Turkish companies listed on the Istanbul Stock Exchange (ISE) for corporate reporting; to determine the company characteristics that influence the information disclosure level on the internet; and to investigate whether there is a significant difference between the firms listed in the Corporate Governance Index of the ISE and those that are not, in terms of level of disclosure on the corporate web sites. Design/methodology/approach - The methodology of the study was content analysis of corporate web sites of corporations listed on the ISE. Findings - Firms, which are listed in the ISE Corporate Governance Index (XCORP), disclose significantly more information on corporate web sites compared to the firms that are not listed in the XCORP. In addition, the results indicate that firm size and being listed in the XCORP are significant explanatory variables for the total disclosure score on the corporate web sites, while industry and profitability are not. Research limitations/implications - Since the study was conducted on a sample of listed companies on the ISE, the findings are not necessarily representative of non-listed companies. Originality/value - The study contributes to the scarce literature on internet reporting in developing countries and it incorporates the XCORP in the predictors of information disclosure level on corporate web sites.

Quality performance measurement practices in manufacturing companies

Purpose – The purpose of this paper is to present the results of a survey study on quality performance measurement practices in the Turkish top 500 manufacturing companies. The study evaluates both financial and non‐financial aspects of quality performance measures in Turkish manufacturing companies.Design/methodology/approach – The methodology of the study was a postal questionnaire survey. The survey was conducted with the top 500 industrial enterprises in Turkey specified by the Istanbul Chamber of Industry (ICI) for the year 2005. These firms are selected and ranked by ICI according to production‐based sales.Findings – Two major findings of the study are: Turkish manufacturing companies utilize non‐financial measures more frequently than financial measures; and Turkish managers perceive non‐financial measures to be more effective than financial measures.Research limitations/implications – The sample is restricted to the top 500 industrial enterprises in Turkey. As the data in this study were collected...

Determinants of corporate cash holdings: evidence from the emerging market of Turkey

This study analyses the factors that might explain the level of corporate cash holdings in a broad sample of Turkish-listed nonfinancial firms over the period 1997 to 2011. The empirical results reveal that, on average, Turkish firms hold 9.1% of their total assets as cash and cash equivalents. There is a steadily increasing trend in cash holding across the years. Both the system GMM and the difference GMM regression results are consistent; almost exactly the same variables are significant and going in the same direction. The findings indicate that the previous year’s cash holding is positive and significant determinant at the current year’s cash level, suggesting that these firms have a targeted cash level. Furthermore, the results reveal that cash flow and growth opportunities have positive and significant impact on the cash level. However, the amount of capital expenditures, liquid assets used as cash substitute, the degree of tangibility of assets, financial debt ratio and leverage have negative and significant impact on the cash level. Most of these explanatory variables were in line with our theoretical background and with previous studies as well.

An analysis of graphic disclosure in annual reports: the case of Turkey

Purpose - The purpose of this study is to: discover the nature and extent of the use of graphs by the top 100 companies listed on the Istanbul Stock Exchange (ISE), Turkey; compare patterns of graphic disclosure across industries; and assess the correlation between graphic disclosure and the variables: open-to-public ratio, firm performance, firm size, and firm profitability. Design/methodology/approach - The methodology of the study is content analysis of annual reports of the corporations listed on the ISE for the year 2006. Findings - The major findings of the study are as follows. About 75 percent of the companies include graphs in their annual reports. The average number of graphs contained in annual reports is 8.6. Financial companies have the highest graph usage per annual report (10.16). The most widely graphed financial variables are sales and earnings; however, earnings per share and dividend per share variables are graphed by none of the companies. There is no correlation between graphic disclosure and the variables open-to-public ratio and firm performance. There is a significant positive correlation between graphic disclosure and the variables firm size and profitability. Research limitations/implications - The findings of this paper are based on the study conducted on the ISE. The results are not generaliseable to non-listed companies. Originality/value - The paper is one of the rare graphical studies conducted in developing countries. Moreover, the study is the first of its kind that has ever been conducted in Turkey.

The impact of multinationality on firm value: A comparative analysis of machine learning techniques

In this study, the impact of multinationality (as measured by foreign sales ratio) and fourteen other financial indicators on firm value (characterized by market capitalization and market-to-book ratio) for the period of 1997-2011 was investigated using two popular machine learning techniques: decision trees and artificial neural networks. We divided the time period of 1997-2011 into two periods; 1997-2004 and 2005-2011 to investigate the robustness of results pre- and post-IFRS implementation. To determine the relative importance of factors as the predictors of firm value, first, a number of classification models are developed; then, the information fusion based sensitivity analysis is applied to these classification models to identify the ranked order of the independent variables. Among the independent variables, multinationality was found to determine firm value only moderately. In addition to multinationality, other financial characteristics such as firm size (as measured by natural logarithm of assets), leverage, liquidity, and profitability were consistently found to be affecting firm value.

Evaluating operational efficiency of a bookshop chain in Turkey and identifying efficiency drivers

Purpose – Comparative shop efficiency within a chain is a key factor in strategic management decisions such as evaluation, promotion and development of shop personnel. Furthermore, overall efficiency of the firm depends on the efficiency of individual shops within the chain. The purpose of this paper is to assess operational efficiency of a bookshop chain in Turkey, and identify efficiency drivers.Design/methodology/approach – The sample includes 79 bookshops within a bookshop chain. The study uses two‐step procedure. In the first stage, data envelopment analysis (DEA) is utilised to evaluate the comparative efficiency of bookshops. The second stage attempts to determine what drives efficiency by using Tobit regression.Findings – After assessment of shops’ efficiency by DEA, the results of Tobit regression revealed that shop age has positive significant influence on bookshop efficiency, whereas manager experience, staff experience, and education level of the shop manager do not.Research limitations/implic...

An investigation of antecedents of organizational citizenship behavior in the Turkish hospitality industry: a structural equation approach

Purpose – This paper aims to investigate the relationships between organizational citizenship behavior (OCB) and its antecedents – job satisfaction (JS), affective commitment (AC), organizational justice (OJ) and charismatic leadership (CL); the relationships among its antecedents; and mediating roles of JS and AC in the relationships between CL and OCB and between OJ and OCB in the Turkish hospitality industry in Antalya region. Improving OCB in the hospitality industry, as in other industries, plays an important role in increasing service quality and organization performance. Design/methodology/approach – The sample used for this study consisted of 768 employees working in 18 hotels (4- or 5-Star) in the Antalya region of Turkey. The data collection methodology of the study was a questionnaire survey which was administered through drop-and-collect methodology. The analysis methodology of the study was structural equation modeling. Findings – The findings indicated that both AC and JS mediated the relati...