The effect of corporate governance on firm value and profitability: time-series evidence from Turkey
Ararat, Melsa and Black, B. S. and Yurtoğlu, B. B. (2016) The effect of corporate governance on firm value and profitability: time-series evidence from Turkey. (Accepted/In Press)
Official URL: http://www.journals.elsevier.com/emerging-markets-review
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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