Firm-Specific Factors Affecting The Probability of Capital Increase: An Empirical Analysis on the BIST Industrial Sector

Abstract

Firms obtain the financing required to maintain their operations from two primary sources: debt and equity. In recent years, the rising cost of borrowing in Türkiye has increased the importance of equity-based financing. As a result, firms have increasingly relied on capital increases to meet their funding needs. This study aims to identify the firm-specific factors influencing capital increase decisions and to assess the likelihood of such decisions based on financial statement indicators. In this context, data from 104 firms operating in the BIST industrial sector for the 2013–2024 period were analyzed using a panel binary choice model. In the study, capital increase serves as the dependent variable, taking the value of 1 when a firm undertakes a capital increase and 0 otherwise. The model includes several explanatory variables, such as key financial ratios that capture liquidity, profitability, financial structure, leverage, and firm size. The empirical findings indicate that increases in total assets, the fixed asset ratio, the short-term debt ratio, and financing expenses significantly raise the probability of firms engaging in capital increase activities.