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The effect of corporate governance on firm value and profitability: Time-series evidence from Turkey

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  • Ararat, Melsa
  • Black, Bernard S.
  • Yurtoglu, B. Burcin

Abstract

We study the corporate governance practices of Turkish public firms from 2006 to 2012, relying on hand-collected data covering the vast majority of listed firms. We build a Turkey Corporate Governance Index, TCGI, composed of subindices for board structure, board procedure, disclosure, ownership, and shareholder rights. TCGI predicts higher market value (with firm fixed effects) and higher firm-level profitability with firm random effects. The principal subindex which predicts higher market value and profitability, and drives the results for TCGI as a whole, is disclosure subindex. We also study the determinants of firms' governance and find that most firm-specific factors have little effect on firms' governance choices.

Suggested Citation

  • Ararat, Melsa & Black, Bernard S. & Yurtoglu, B. Burcin, 2017. "The effect of corporate governance on firm value and profitability: Time-series evidence from Turkey," Emerging Markets Review, Elsevier, vol. 30(C), pages 113-132.
  • Handle: RePEc:eee:ememar:v:30:y:2017:i:c:p:113-132
    DOI: 10.1016/j.ememar.2016.10.001
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    2. repec:spr:manrev:v:68:y:2018:i:4:d:10.1007_s11301-018-0145-7 is not listed on IDEAS
    3. Artem E. Anilov & Irina V. Ivashkovskaya, 2018. "Do Boards Of Directors Affect CEO Behavior? Evidence From Payout Decisions," HSE Working papers WP BRP 69/FE/2018, National Research University Higher School of Economics.
    4. repec:eee:ememar:v:38:y:2019:i:c:p:1-17 is not listed on IDEAS
    5. repec:eee:riibaf:v:46:y:2018:i:c:p:240-250 is not listed on IDEAS
    6. repec:eee:riibaf:v:42:y:2017:i:c:p:102-123 is not listed on IDEAS

    More about this item

    Keywords

    Turkey; Corporate governance; Governance index;

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K29 - Law and Economics - - Regulation and Business Law - - - Other

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