The Endogenous Variables Explaining the Market Value of Manufacturing Firms in the ISE: A Sectoral Level Panel Data Analysis for Sectors

In this study, we analyze the relationship between the market value (market value book ratio) and internal variables (financial ratios) at industry level by using panel data analysis for the data from 111 manufacturing firms during the period 2000-2010. The results show that 23 percent of market value of firms has been explained by the firm-specific internal aspects and the total debt ratio has a negative effect on the market value. The sectoral level analysis indicates that the explanatory power tends to increase in general, and impacts of the explanatory variables on the market value differ by sectors or their signs change. Accordingly, it is concluded that sectoral differences should be taken into account by the studies which focuses on the relationship between firm market values and endogenous variables.