Commenced in January 2007
Frequency: Monthly
Edition: International
Paper Count: 30319
Corporate Governance and Share Prices: Firm Level Review in Turkey

Authors: Erkan Kara, Raif Parlakkaya, Ahmet Diken

Abstract:

This paper examines the relationship between corporate governance rating and stock prices of 26 Turkish firms listed in Turkish stock exchange (Borsa Istanbul) by using panel data analysis over five-year period. The paper also investigates the stock performance of firms with governance rating with regards to the market portfolio (i.e. BIST 100 Index) both prior and after governance scoring began. The empirical results show that there is no relation between corporate governance rating and stock prices when using panel data for annual variation in both rating score and stock prices. Further analysis indicates surprising results that while the selected firms outperform the market significantly prior to rating, the same performance does not continue afterwards.

Keywords: Corporate Governance, Performance, panel data analysis, stock price

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1108052

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 2109

References:


[1] H. Aman, and P. Nguyen, “Do stock prices reflect the corporate governance quality of Japanese firms?,” Journal of The Japanese and International Economies, 22. 647-662, 2008.
[2] B. N. Balasubramanian, B. S. Black, and V. S. Khanna, “The Relation between Firm Level Corporate Governance and Market Value. A Study of India,” Emerging Market Review, vol.11, pp.319-340, 2010.
[3] M. Benz, and B. S. Frey, “Corporate Governance: What Can We Learn from Public Governance,” Academy of Management Review, vol.32, No.1, 92-104, 2007.
[4] Z. Body, A. Kane, and A.J. Marcus, “Essentials of Investment,” 9th ed. New York: Mc Graw Hill, p. 9, 2012.
[5] Capital Markets Boards of Turkey (CMB), “Corporate Governance Principles,” CMB Publishment, July 2003.
[6] H. Christiansen, and A. Koldertsova, “The Role of Stock Exchanges in Corporate Governance,” Financial Market Trends, OECD, Prepublication version for Vol.2009/1
[7] B. Dincer, and C. Dincer, “Corporate Governance and Market Value: Evidence from Turkish Banks,” International Journal of Academic Research in Business and Social Sciences, vol.3, no.1, January 2013.
[8] P.A. Erdonmez, “Restructuring of Corporate Industry in Turkey after the Financial Crisis of 2001,” Bankacilar Dergisi, vol.47, 2003.
[9] P.A. Gompers, J.L. Ishii, and A. Metrick, “Corporate Governance and Equity Prices,” Quarterly Journal of Economics, 118 (1), 107-155, 2003.
[10] O. Karamustafa, I. Varici, and B. Er, “Kurumsal Yönetim ve Firma Performansı: IMKB Yonetim Endeksi Kapsamindaki Firmalar Uzwerinde Bir Uygulama,” Kocaeli Universitesi Sosyal Bilimler Enstitusu Dergisi, (17) 2009/1: 100-119, 2009.
[11] S. Kılıç, “Measuring the Return Performances of the Companies Included in ISE Corporate Index,” Finans Politik & Ekonomik Yorumlar Dergisi, pp. 48-552, 2011.
[12] O. Kowalewski, “Does Corporate Governance Determine Corporate Performance and Dividends during Financial Crisis: Evidence From Poland,” Polish National Science Centre (NCN), project N N113 361840, 2012.
[13] London Stock Exchange “Corporate Governance for Main Market and AIM Companies,” White Page Ltd. September, 2012.
[14] S.U. Malik, “Relationship between Corporate Governance Score and Stock Prices: Evidence from KSE-30 Index Companies,” International Journal of Business and Social Science, vol.3 no.4, Special Issue- February 2012.
[15] T. Mortimer, “Corporate Governance in Poland,” Corporate Ownership & Control, vol.7, issue 2, Winter 2009.
[16] Y.A.Pekcan, S. Atan, and C.M. Sivacioğlu, “Corporate Governance as a Quantative Indicator and a Study on Istanbul Stock Exchange Corporate Governance Index in Turkey,” Journal of Business, Economics & Finance, Year 2012, volume 1, issue 1
[17] Z.D. Rahman, “The Impact of Internet Financial Reporting on Stock Prices Moderated by Corporate Governance: Evidence from Indonesia Capital Market” http://ssrn.com/abstract=1576327, 2010.
[18] S. Walker, “Corporate Governance: Its effect on Share Price,” RIBM Doctoral Symposium 2013, 14-15th March, 2013.
[19] F.Y. Tatoglu, “Econometrics of Panel Data,” 3th ed. Istanbul: Beta, 2013, p.253.