The financial leverage-financial performance relationship in the emerging market of Turkey: the role of financial distress risk and currency crisis

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dc.authorid0000-0002-0674-0136en_US
dc.contributor.authorKalash, Ismail
dc.date.accessioned2021-12-16T06:12:09Z
dc.date.available2021-12-16T06:12:09Z
dc.date.issued2021en_US
dc.departmentDicle Üniversitesi, İktisadi ve İdari Bilimler Fakültesi, İşletme Bölümüen_US
dc.descriptionWOS:000725417000001
dc.description.abstractPurpose The purpose of this article is to examine how financial distress risk and currency crisis affect the relationship between financial leverage and financial performance. Design/methodology/approach This study uses data of 200 firms listed on Istanbul Stock Exchange during the period from 2009 to 2019, resulting in 1950 firm-year observations. Pooled ordinary least squares, random effects, firm fixed effects and two-step system GMM models are used to investigate the hypotheses of this study. Findings The results reveal that financial leverage has negative and significant effect on financial performance, and that this effect is stronger for firms with higher financial distress risk. Furthermore, the findings provide moderate evidence that currency crisis exacerbates the negative association between leverage and performance. Practical implications The results of this study have important implications for firms in emerging markets. Managers can enhance firm performance by reducing the level of financial leverage, especially in firms with higher financial distress risk. These firms incur higher debt costs, and then they can benefit more from the decreases in debt ratio in their capital structure. Moreover, the decreases in debt level have more importance in currency crisis times, when the access to external finance becomes more expensive and more difficult. Originality/value To the author's knowledge, this research is the first to examine the effect of currency crisis on the financial leverage-financial performance relationship and is one of few that investigate the role of financial distress risk in determining the linkage between leverage and firm performance.en_US
dc.identifier.citationKalash, I. (2021). The financial leverage-financial performance relationship in the emerging market of Turkey: the role of financial distress risk and currency crisis. Euromed Journal of Business, Early Access.en_US
dc.identifier.doi10.1108/EMJB-04-2021-0056
dc.identifier.issn1450-2194
dc.identifier.issn1758-888X
dc.identifier.scopus2-s2.0-85120425870
dc.identifier.scopusqualityQ1
dc.identifier.urihttps://hdl.handle.net/11468/8536
dc.identifier.volumeEarly Accessen_US
dc.identifier.wosWOS:000725417000001
dc.identifier.wosqualityN/A
dc.indekslendigikaynakWeb of Science
dc.indekslendigikaynakScopus
dc.institutionauthorKalash, Ismail
dc.language.isoenen_US
dc.publisherEmerald Group Publishingen_US
dc.relation.ispartofEuromed Journal of Business
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanıen_US
dc.rightsinfo:eu-repo/semantics/closedAccessen_US
dc.subjectFinancial leverageen_US
dc.subjectFinancial performanceen_US
dc.subjectFinancial distress risken_US
dc.subjectCurrency crisisen_US
dc.titleThe financial leverage-financial performance relationship in the emerging market of Turkey: the role of financial distress risk and currency crisisen_US
dc.titleThe financial leverage-financial performance relationship in the emerging market of Turkey: the role of financial distress risk and currency crisis
dc.typeArticleen_US

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