The main purpose of this study is to understand the determinants of corporate hedging in emerging markets. The dependent variable, hedging, is estimated by a categorical variable. This process necessitates the usage of logistic regression. The analysis is conducted using data from non-financial companies listed in Borsa Istanbul (BIST) between 2010 and 2014. Evidence reveals that the cost of underinvestment has the highest impact on the likelihood of hedging. Firms with higher cost of underinvestment are more likely to use financial derivatives. The second most important determinant of hedging is growth opportunities. Interestingly, firms with greater growth opportunities are less likely to use derivatives in emerging markets. Results indicate that firm size, foreign sales, profitability, and dividend yield are the other predictors that increase the likelihood of hedging. On the other hand, growth opportunities, free-float rate, interest coverage ratio, and leverage have a negative relationship with the possibility of using financial derivatives.
The main objective of this chapter is to understand the determinants of the capital structure of the firms that provide high quality corporate-sustainability reporting. First, all the non-financial companies quoted in Borsa Istanbul (BIST) will be studied in order to see the full picture of the market. Second, all the firms that are included in the computation of the BIST Sustainability Index (XUSRD) will be analyzed as the firms that provide high quality corporate-sustainability reporting. In line with the literature on capital structure variables such as profitability, size, risk, growth, tangibility, non-debt tax shield and ownership structure were picked as the possible determinants of capital structure. Moreover, long-and short-term debt ratios were selected as the proxies for capital structure. Our findings indicate that when capital structure is measured by long-term debt, profitability, size, tangibility, the ratio of free-float outstanding value to total assets, and institutional ownership percentage become the main determinants of capital structure for the whole market. For sustainability index firms, when capital structure is measured by the long-term debt ratio, the main determinants of capital structure become non-debt tax shield and tangibility. On the other hand, for the same type of firms, when capital structure is measured by the short-term debt ratio, tangibility and the ratio of free-float outstanding value to total assets become the main determinants of capital structure.
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