THE EFFECT OF CHANGES IN FINANCIAL RATIOS OF FIRMS ON SHARE PRICE: BORSA ISTANBUL (BIST) INSURANCE SECTOR

Özet

Insurance companies are essential risk management players in the financial system and play an active role in capital markets by channeling the funds they collect into various investment instruments. Therefore, the financial structures of companies play a critical role in market stability and investors’ decision-making processes. In this study, the effects of the financial ratios of companies operating in the Turkish insurance sector on share prices are analyzed in detail. In the analysis, using data from 2016Q2-2024Q1, the companies’ capital structures, borrowing ratios, liquidity positions, and other financial structure elements are examined. The study aims to investigate the relationship between these financial structure elements that affect investors’ decisions and share prices. The study analyzes the effects of financial structure ratios on share prices using panel data methods. The analysis results show that the financial structure of insurance companies has a significant impact on share prices. In particular, capital structure, borrowing ratio, and liquidity stand out among the financial ratios to which investors pay attention. Effective debt management policies should be developed to prevent the negative effects of companies’ borrowing policies on market values.

Abstract

Insurance companies are essential risk management players in the financial system and play an active role in capital markets by channeling the funds they collect into various investment instruments. Therefore, the financial structures of companies play a critical role in market stability and investors’ decision-making processes. In this study, the effects of the financial ratios of companies operating in the Turkish insurance sector on share prices are analyzed in detail. In the analysis, using data from 2016Q2-2024Q1, the companies’ capital structures, borrowing ratios, liquidity positions, and other financial structure elements are examined. The study aims to investigate the relationship between these financial structure elements that affect investors’ decisions and share prices. The study analyzes the effects of financial structure ratios on share prices using panel data methods. The analysis results show that the financial structure of insurance companies has a significant impact on share prices. In particular, capital structure, borrowing ratio, and liquidity stand out among the financial ratios to which investors pay attention. Effective debt management policies should be developed to prevent the negative effects of companies’ borrowing policies on market values.

Yazarlar

Mehmet Sinan ÇELİK

Anahtar Kelimeler

Financial Ratios, Stock Prices, Panel Regression

JEL Codes

G14, Q56

Yayın Bilgileri

Cilt 4, Sayı 2, 2024 · Sayfa 15-26

DOI: 10.52898/ijif.2024.7

Dosyalar