THE EFFECTS OF OWNERSHIP STRUCTURE ON CAPITAL STRUCTURE: A STUDY ON BORSA ISTANBUL

Abstract

The study examines the effects of ownership structure on capital structure. Results of this research provide useful information for managers to align their capital structure and ownership structure decisions. The research covered the period of 2012-2017 for twenty companies selected from three sub-sectors with the largest numbers of companies in Borsa İstanbul Manufacturing Industry. (1) Metal products, equipment and machinery; (2) Chemical, rubber, petroleum and plastic products; (3) Non-metallic mineral products sectors are included in the sample. According to the results of the panel data analysis, foreign ownership reduces financial leverage. Firms with high corporate ownership or high free-float rate use have higher leverage. When the stakes of the second and third largest shareholders get closer to the largest shareholder's level, the debt ratio decreases. However, there is no evidence about a significant effect of the largest shareholder’s stake on capital structure. The findings obtained in the study support that the ownership structure has some influence on the capital structure either directly or indirectly.