Financial Decisions, Profitability and Firm Value
The Moderating Role of Business Group Affiliation in Borsa Istanbul
DOI:
https://doi.org/10.32832/jm-uika.v17i3.24440Keywords:
Financial Decisions, Business Group Affiliation, Agency Theory Type II, Borsa Istanbul, BISTAbstract
Extant literature identifies financial decisions and profitability as core determinants of firm value, though empirical evidence remains persistently inconsistent and highly debated among corporate finance researchers, particularly in emerging markets experiencing macroeconomic turbulence such as Türkiye. This study aims to analyze the effects of investment decision, debt policy, dividend policy and profitability on the firm value of manufacturing companies listed on Borsa Istanbul and subsequently to analyze the moderating role of business group affiliation on these relationships. Utilizing a quantitative longitudinal design, a balanced panel data set of 13 manufacturing firms listed on the BIST Industrials Index (XUSIN) from 2020 to 2024 was compiled, yielding 65 firm year observations. Hypotheses were tested using advanced statistical techniques including Moderated Regression Analysis (MRA) within a Random Effects Model (REM) framework executed in EViews 12 statistical software. The empirical results reveal that dividend policy and profitability exert significant positive impacts on firm value, whereas investment decision and debt policy show no statistical significance. Furthermore, business group affiliation fails to significantly moderate these relationships under severe macroeconomic turbulence. These findings imply that during hyperinflation, investors heavily prioritize short-term, realized cash flows over nominal or anticipatory signals, providing crucial empirical nuances to signaling theory and Type II agency conflicts in emerging markets characterized by extreme macroeconomic uncertainty and sudden policy shifts.
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