CAPITAL STRUCTURE AND DIVIDEND POLICIES IN TURKISH

FIRM

HATİCE SAĞLAMGAMZE ASLAN

ÖZGE ÖZENASLI BOZKURT

ALİ CAN DEMİR

CAPITAL STRUCTURECapital structure is the name that

given combination of debt and equity capital used to finance business activities.

There are four basic factors that affecting the capital structure decision of companies mentioned.

These factors include:

CAPITAL STRUCTURE

1) Risk level of the enterprise:2) Business tax status3) Financial flexibility4) Aggressive or conservative

structure of the enterprise.

FINANCIAL RISK

Entity, in order to take advantage of financial leverage in the formation of the capital structure of firms that use debt and equity owners of which there is a risk with additional risk for the state of activity.

BUSINESS RISK

Business risk, the existing uncertainty in the estimation of revenues over assets or businesses to be provided in future cases, not using debt is defined as the uncertainty of return on equity to be provided through.

TARGET CAPITAL STRUCTURE DECISIONBusinesses creating capital structures,

debt and financial objectives of the new stock removal options must make an assessment in terms of.

Profit before interest and taxes is one of this analysis are used to evaluate the per-share profit analysis.

Theoretical Approaches to Describing the Structure of Capital

1) NET INCOME APPROACHThe total capital cost of the enterprise

and the market value of the debt / equity ratio will be affected argues

Critical assumption of this approach, the debt / equity ratio increases the cost of debt and equity does not change the cost of

2)NET OPERATING INCOME APPROACH

The weighted average cost of capital for business loans and the value of the shares in circulation, used in the leverage ratio is considered to be independent

functional in the net income approach, the cost of debt based on the basic assumption of all debt / equity is that the compositions of the same.

3)THE TRADITIONAL APPROACH

According to the traditional approach, there are businesses and businesses in terms of optimal capital structure in a single weighted average capital costs by taking advantage of the degree of financial leverage can increase their market value thinking.

4) MILLER MODIGLIANI APPROACH

The relationship between capital structure and market value of the cost of capital, net operating income approach are explained, such as.

Other factors that affecting the capital structure

1) GENERAL ECONOMIC SITUATION Financing and investment decisions have

also affected the economy in the current situation at.

Economic policies, firms' investment decisions directly or indirectly by influencing the composition of the resources used to finance the investments businesses can make changes to market values

2) CHARACTERISTICS OF THE INDUSTRY

Affected by seasonal movements in the shape of the industry where the degree of competition in the industry where factors such as stage effects used a combination of funding sources

3) BUSINESS PROPERTIES

The size of the legal structures of businesses, assets, distribution, growth, desire, and credit managers' attitudes toward risk-taking affects worthiness factors such as capital structure decision.

The Dividend Distribution Policy

Dividend policy to distribute the profits and how much of the business partners on how much of the business decisions within the left includes auto financing will be provided.

Factors that affecting the dividend distribution policy

1) Laws2) Tax laws3) Making investments4) Liquidity5) Funding opportunities6) The stability of the profitability7) Level of debts

Types of dividend policy1) distribute a fixed amount of dividend2) fixed rate of dividend distribution3) besides a fixed amount or percentage

distribution of additional dividend4) the rate of dividend distribution of

residuals5) payment of interim dividends

Dividend payment methods1) dividend payments made in cash2) payment of stock dividends in the form

of3) payment of dividends by purchasing its

own shares

Calculation of Profit distributionFinancial Profit= profit for the period+ disallowable expenses -

and discounts are non-taxable income.

Dividend policy At least 20% of distributable profit, public

companies the partners have to distribute as a dividend.

Example of dividend policySINPAS REIC DIVIDEND POLICY

Our dividend policy is based on Turkish Commercial Code, Capital Market Board’s Law & Legislations, Tax Code, our Articals of Assosiation, and other related legislations.

While deciding on dividend, the changes in the related legislation, our long term strategy, the capital need of the Company, our investment and financing policies, profitibility and cash position are all taken into account.

Every year, the Board of Directors takes a

decision regarding dividend distribution (the amount, the type and distribution date) which has to be sent to General Assembly’s approval.

Going forward our Company’s plan is to distribute minimum 20% of our net profits in cash and/or bonus shares. If BOD suggests not to distribute profit for that specific year or suggests to distribute less than 20% of the net profit, the reasoning behind such a decision will be explained to shareholders.

Example of dividend policy Koza altın: Dividend Policy Our near-term priority is to significantly increase the scale of

our operations by growing our current operations, making strategic investments in new goldfields and increasing our exploration activities using our existing exploration licenses. We plan to finance these growth activities primarily by re-investing our profits into our business.

The timing and amount of any future dividends will depend on the level of distribution required by the CMB, as well as our existing and future financial condition, results of our operations, liquidity needs and other matters we may consider from time to time, including, without limitation, capital expenditures, our financial performance and equity market conditions.

Depending on our strategic objectives, financial performance and liquidity needs our company will distribute the minimum dividend required by the CMB as cash and/or bonus shares, within the framework of Turkish Commercial Code, Capital Market Regulations, Taxation Regulations and the relevant clause of our Articles of Association related to the dividend distribution. The dividend distribution to be taken by the General Assembly might be wholly in cash, wholly in bonus shares or partially in cash and partially in shares.