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

Melsa Ararat; Bernard Black; B. Burcin Yurtoglu

doi:10.1016/j.ememar.2016.10.001

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

Melsa Ararat, Bernard Black, B. Burcin Yurtoglu^*

^*Corresponding author for this work

Pritzker School of Law

Research output: Contribution to journal › Article › peer-review

119 Scopus citations

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.

Original language	English (US)
Pages (from-to)	113-132
Number of pages	20
Journal	Emerging Markets Review
Volume	30
DOIs	https://doi.org/10.1016/j.ememar.2016.10.001
State	Published - Mar 1 2017

Keywords

Corporate governance
Governance index
Turkey

ASJC Scopus subject areas

Business and International Management
Economics and Econometrics

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10.1016/j.ememar.2016.10.001

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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.",

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AU - Yurtoglu, B. Burcin

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AB - 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.

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

Abstract

Keywords

ASJC Scopus subject areas

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