DRIVERS OF FIRMS' DEBT RATIOS: EVIDENCE FROM TAIWANESE AND TURKISH FIRMS

Abstract

This study investigates the drivers of debt ratios of the firms listed on the stock markets of two different countries, namely Turkey, a developing country and Taiwan, a newly developed country. The factors impacting short-term, long-term, and total debts are selected as EBIT (Earnings before Interest and Tax), ROE (Return on Equity), sales, total assets, fixed assets-total assets ratio, and depreciation- total assets ratio. The findings indicate that there are differences between Turkish and Taiwanese firms in terms of the drivers' impacts on the debt structures of the firms. The proposed regression models work better on the data collected from Taiwan as compared to the data from Turkey. Possible reasons are discussed in the final section.