Aslı Aybars

The Impact of Selected Firm Features on Sales Growth: Empirical Evidence from S&P500

Firm growth is an important research topic in the academic arena and accepted as a leading indicator of firm’s health. However, the debate as to the determinants of growth has not yet been fully solved. Many studies concocted in developed and developing economies, already attempted to identify the driving forces that spur firm growth. This study investigates how selected factors influence sales growth of firms by employing 22 years of consecutive data on a sample of 243 nonfinancial Standard and Poor’s 500 (S&P500) companies. The empirical findings of panel data analysis demonstrate significant influence of previous year sales growth, average growth rate of relevant industry, firm size, and change in profitability level on the selected proxy of firm growth. Additionally, financial leverage, market-to-book ratio, price-to-earnings ratio, and plowback ratio are not found to have any significant relationship with the growth rate of the firm. A crucial result to emphasize is that the market in which firms operate is the major force that spurs growth, and this impact is captured by the industry growth variable.

Is Excess Free Cash Flow Over-Invested? Evidence from Borsa İstanbul

In a perfect capital market, investments should not be related to cash flows of the firm. Investments should only be determined by the amount of renewal investments required and growth opportunities available to the firm. Contrarily, due to the conflicts of interest between the managers and the shareholders, the theory on agency costs and free cash flow hypothesis propose that managers are inclined to over-use free cash flow, which is in excess of value-adding investments. It is claimed that firms invest their extra free cash flow on projects with returns below cost of capital of the firm. Some prior studies made on the topic implied the validity of this hypothesis. In other words, firm’s resources might be wasted by means of over-investing. This study, based on a panel data of 154 Borsa Istanbul firms observed between 2005-2015, confirmed that firms over-invest when there is free cash flow available in excess of growth opportunities and dividends. Prior studies have used mostly regression models or Tobin’s q to estimate investment prospects of the firm. However, this study adopted a direct method to estimate investment opportunities available to the firm.

Testing Target-Adjustment and Pecking Order Models of Capital Structure and Estimating Speed of Adjustment: Evidence from Borsa Istanbul (BIST)

Thisarticleexaminestheexplanationpowerofthepeckingorderandtargetadjustmentmodelson 148BorsaIstanbul(BIST)firms’capitalstructureovertheperiodof2005to2015.Thearticlealso estimatesthespeedofadjustment(SOA)tothetargetedleveragelevel.Althoughafirm’scapital structureisjointlydeterminedbyboththeories,targetadjustmentmodelappeartohaverelatively higherpower inexplainingcapital structuresofBISTfirms.Estimatesof theadjustment speeds suggeststhatfirmsmovetowardtheirtargetdebtratiosatafastpace.Adjustmentspeedsestimated withmarketleverageweresignificantlyhigher(44%-83%).Sharepricevolatilitywasfoundtohave arathershort-termimpactonmarketleverage.Firmsrapidlyrevertbacktotheirtargetsandoffset thesefluctuationswithinfewyears.Adjustmentspeedestimatesvarywiththeestimationmethod. Systemgeneralizedmethodsofmomentestimator(GMM-SYS)providedtheslowestSOAestimation whereasfirm-fixedeffectsestimatorsimpartedthefastestadjustmentspeed. KEywORdS Borsa Istanbul, Capital Structure, Emerging Market, Panel Data Analysis, Pecking Order Theory, Speed of Adjustment, Target Adjustment Model, Trade Off Theory

Do Institutional Investors Prefer to Invest in Socially Responsible Companies? An Empirical Analysis in Turkey

Corporate social responsibility (CSR) has become an indispensible item on companies’ agendas and even though the business discipline has been with us for a few decades, it started to attract much more attention recently. Companies are emphasizing the importance of addressing issues relating to the social, economic and environmental aspects of their operations which affect their stakeholders in addition to their core business activities. Actions undertaken by socially responsible companies may be considered as determinants in the decision making process of investors. This is especially the case with institutional investors, who have long term investment horizon and are more willing to invest in companies that are serious about CSR activities. Numerous analyses have been conducted in the literature regarding the relationship between institutional shareholding and corporate social performance mainly in developed countries. However, this study focuses on an emerging country—Turkey, and probes whether institutional investors have a tendency to invest in socially responsible companies utilizing logistic regression analysis. The empirical part of the study employs available dataset combining data relating to percentage of shares that are held by institutional investors with the financials and selected CSR measures for companies listed in Istanbul Stock Exchange.