Title: The effect of corporate governance on firm performance: a case of Turkey

Authors: Yunus Emre Akdogan; Melek Acar Boyacioglu

Addresses: Faculty of Economics and Administrative Sciences, Bozok University, Ataturk Yolu 7. Km. 62200 Yozgat, Turkey ' Faculty of Economics and Administrative Sciences, Selcuk University, Campus 42031 Konya, Turkey

Abstract: Good corporate governance system minimises the misconduct risks of the authority to decide about the company contribute to the fall of capital costs and therefore has a positive effect on the economic activities of the company. Moreover, it is expected that these positive results reflect on the stock prices by ensuring the efficient market condition. In this context, the presence of any relation between application level of corporate governance principles and performances of the companies listed on the Istanbul Stock Exchange (ISE) National 100 Index has been tested. In this framework, corporate governance rating, which represents the application level of the companies to the corporate governance principles, has been performed. Afterwards, it has been investigated whether application level of corporate governance principles has an effect on return on asset, return on equity and stock return assessing firm performance through the multiple hierarchical regression analysis. As a result of the study, it has been revealed that a significant and positive relationship exists between the companies' application level of the corporate governance principles and return on asset and return on equity.

Keywords: corporate governance rating; firm performance; Istanbul Stock Exchange; Turkey; stock prices; return on assets; return on equity.

DOI: 10.1504/IJCA.2014.063365

International Journal of Critical Accounting, 2014 Vol.6 No.2, pp.187 - 210

Published online: 25 Jul 2014 *

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