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

    Research output: Contribution to journalArticlepeer-review

    56 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 languageEnglish (US)
    Pages (from-to)113-132
    Number of pages20
    JournalEmerging Markets Review
    Volume30
    DOIs
    StatePublished - Mar 1 2017

    Keywords

    • Corporate governance
    • Governance index
    • Turkey

    ASJC Scopus subject areas

    • Business and International Management
    • Economics and Econometrics

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