COMPARATIVE DUE DILIGENCE ANALYSIS OF DEBT CAPACITY AND COST OF DEBT: COMPANIES IN EURO AREA VERSUS COMPANIES IN TURKEY

industrial firms. During and after 2008 global financial crisis, financial indicators and sources of corporations in Euro Area countries and Turkey have been changed. This study aims to compare and analyze the debt capacities and the cost of debt for a large sample of 2.938 industrial firms operating in 17 Euro Area countries and Turkey between 2006 and 2010. Furthermore, it aims to determine the effects of global financial crisis on these firms. As a result of the study, when all firms are concerned, Anova test showed that firms in Euro Area and Turkey have debt ratios significantly different from each other for the whole period. All firms slightly increase their debt ratios in the crisis period. Increase is higher for Turkish firms for both production and service sectors. The cost of debt was maximum for Turkish firms in the group at four out of five years. In 2009, it started to decrease and got closer to the level of Euro Area firms in 2010. Furthermore, the effects of the global financial crisis were felt deepest in production sector firms in Turkey. Suggestions for Turkish firms to continue to decrease their cost of debt are made at the conclusion. 1