The main objective of this chapter is to understand the trade-off between using debt and equity in the financing decisions of investments and investigate whether capital structure affects profitability of corporate firms in Turkey. This relationship is tested through using observations of 235 firms for 4 years with the inclusion of Correlation Analysis, Independent Sample t-test, and Regression Analysis with random/fixed effect estimation. Results show that in the manufacturing sector, size, growth, GDP, market to book value, short-term debt to total assets, and total debt to total assets came out to be significant factors in determining profitability (i.e. ROA). Findings indicate that the relationship between independent variables (i.e. debt/total assets and profitability) is positive, since firms can benefit from the tax advantages brought through receiving additional debt. For the service firms, contradictory results are obtained, such that the relationship between leverage and profitability is negative.

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With regulations on corporate governance set forth by the Capital Markets Board, in line with the developments taking place worldwide, an obligation to have independent board members on the board of directors is born. While improving the corporate governance standards of a company, this regulation also positively contributes to the economy of the country as a whole through positively affecting its foreign direct investments. Since independent board members are expected to take influential roles in the key areas of a company such as strategy setting, performance evaluation, risk taking and human related issues; an effective independent board member should possess technical as well as interpersonal skills. The main purpose of this paper is to analyze the significance of "independent board members" that has a substantial role in the implementation process of corporate governance rules in Emerging Markets like Turkey.

This chapter investigates the impact of financial flexibility (FF) on investments, which constitutes the basis for sustainable corporate development. Using a large database of 1,205 firms from three emerging countries in Europe—Poland, Russia and Turkey—for the time period between 2000 and 2016. The authors provide evidence that financial flexibility, achieved through conservative leverage policies, enhances companies' investments and positively contribute to corporate sustainability. Moreover, as the number of years of low leverage kept by firms increase so does the impact of financial flexibility on corporate investment. Besides financial flexibility, internal cash generation capacity of firms, and sales growth also improve the investment capability of firms, improving corporate sustainability. The results support the hypothesis that financial flexibility enhances companies' investment capability, which is an extremely essential tool for firms to have in their businesses.

This paper investigates the asymmetric behavior of the selling, general and administrative (SG&A) costs of acquirers, and reveals its effects on mergers & acquisitions (M&A) performance in a one-year event window. It is based on a sample of 6888 M&As completed in the U.S. during the 2003-2015 period and employs panel data regressions. The results show that 73% of the acquirers display asymmetric cost behavior. A significant negative relation is found between cost stickiness and acquirers' abnormal returns following the merger announcement. Competition in the market for corporate control is positively related with acquirer returns but exacerbates the negative effects of cost-stickiness on abnormal returns of acquirers. The acquirers' risk of default is significantly negatively related to the abnormal returns they generate. This adverse effect of default risk on returns is stronger for acquirers with anti-sticky costs. Acquirer risk offsets the positive effects of competition on returns. Acquirers with sticky costs have lower abnormal returns than those with anti-sticky costs in a one-year window. The present study contributes to the literature by revealing the asymmetric cost behavior of acquirers involved in merger activity during the last decade, and provides evidence for an alternative explanation for the lower abnormal returns of the acquiring firms.