Do Corporate Governance, Independent Boards & Auditors Affect Market And Financial Performance:An Application To Istanbul Stock Exchange
In a recent study, level of implementation of the corporate governance principles by Turkish listed companies and the intermediary institutions are analyzed in detail.
• The financial rights of board members are not performance-based, to a great extent, in Turkey.
• The major shareholders decide on the appointment of the board members and key executives.
• The disclosure requirements for companies traded on the ISE are well developed.
• Programs for promoting employee share ownership have not yet become widespread.
• Members of the board of directors do not utilize, to a great extent, their authority to restrict pre-emptive rights of the existing shareholders in capital actions.
• Voting rights are classified into different groups in only 17% of the ISE trading companies and member firms.
• Setting up employees’ foundations and funds are not widespread among the traded companies.
• The roles of the chairman and the executive at the top level who is responsible of operations, i.e., the chief executive officer, have not been separated. Examples of such a distinction are limited.
• It is not common to nominate independent members in the board of directors
• The effectiveness of the legal auditors appointed pursuant to the Turkish Commercial Code should be increased.
• It is more common for the ISE traded companies to issue preferred stocks compared with the ISE member firms.
• An inspection department exists approximately within 20% of all the companies operating in both the manufacturing and financial sectors.
• The classification of voting rights into different groups and issuance of preferred stocks in the financial sector is three times higher than in the manufacturing industry.
• The financial and market performance of those companies that have implemented corporate governance principles is higher than those which have implemented corporate governance to a lesser degree."
Moreover researchers have come to the conlusion that a linear relationship exists between the companies’ performances that increase in the positive direction and the implementation of corporate governance principles.
"The Evaluation of the Questionnaire Results"
• Out of the total 513 traded companies and member firms of the ISE, 358 of them have responded to the questionnaire. 52% of the respondents have replied that they were aware of corporate governance principles and standards.
• The majority of the board members are also appointed at several other companies belonging to the same group.
• A kinship exists between the board members and major shareholders. Such relationship is at a higher level in the ISE member firms, in particular.• Out of the total 513 traded companies and member firms of the ISE, 358 of them have responded to the questionnaire. 52% of the respondents have replied that they were aware of corporate governance principles and standards.
• The majority of the board members are also appointed at several other companies belonging to the same group.
• The financial rights of board members are not performance-based, to a great extent, in Turkey.
• The major shareholders decide on the appointment of the board members and key executives.
• The disclosure requirements for companies traded on the ISE are well developed.
• Programs for promoting employee share ownership have not yet become widespread.
• Members of the board of directors do not utilize, to a great extent, their authority to restrict pre-emptive rights of the existing shareholders in capital actions.
• Voting rights are classified into different groups in only 17% of the ISE trading companies and member firms.
• Setting up employees’ foundations and funds are not widespread among the traded companies.
• The roles of the chairman and the executive at the top level who is responsible of operations, i.e., the chief executive officer, have not been separated. Examples of such a distinction are limited.
• It is not common to nominate independent members in the board of directors
• The effectiveness of the legal auditors appointed pursuant to the Turkish Commercial Code should be increased.
• It is more common for the ISE traded companies to issue preferred stocks compared with the ISE member firms.
• An inspection department exists approximately within 20% of all the companies operating in both the manufacturing and financial sectors.
• The classification of voting rights into different groups and issuance of preferred stocks in the financial sector is three times higher than in the manufacturing industry.
• The financial and market performance of those companies that have implemented corporate governance principles is higher than those which have implemented corporate governance to a lesser degree."
Moreover researchers have come to the conlusion that a linear relationship exists between the companies’ performances that increase in the positive direction and the implementation of corporate governance principles.
