Firm Value and External Financing Needs

Abstract

The purpose of this paper is to examine effects on firm value of external financing needs and BIST 100 index to firms listed in the index of Istanbul Stock Exchange manufacturing industry by the panel data analysis methods in the period of 2008-2012. As a result of dynamic panel data analysis, it has be found to increase value of firms by previous term value of firm, being the BIST 100 index, the external financing needs, the financial leverage ratio, firm size and profitability.  It was observed that manufacturing firms in Turkey are firms having growth potential, profitable at low rate, whereas financial risk of them is high.It has been found that firms benefit from shorts term debt market being lower borrowing cost and risk because long term debt market hasn’t developed in Turkey leads to positive relationship between external financing needs and firm value. Additionally, It is determined that value of firms included in the index is higher from without because firms are necessary providing certain conditions to take part in the BIST 100.