Corporate Governance and Firm Performance: Recent Evidence from Borsa Istanbul (BIST) Corporate Governance Index (XKURY)

Alev Dilek Aydin, Ahmet Ozcan


As competition for foreign and domestic investment increases, firms look for new ways to remain competitive in today's complex business environment.  Good corporate governance is rewarded with higher market valuation and companies with better corporate governance practices enjoy higher price-to-book ratios. Investors are actually ready to pay a premium for a company that is respectful to corporate governance practices.  In this study, we aim to analyze the impact of several accounting ratios on the corporate governance scores of the selected companies from the Borsa Istanbul (BIST) Corporate Governance Index (XKURY). Our study covers the period of 2008 and 2014. To conduct our study, we selected three types of ratios : liquidity ratios, profitability ratios and operating efficiency ratios. Our results reveal the positive impacts between the liquidity ratios of Net Cash Flow by Operating Activities and Net Working Capital to Total Assets on the corporate governance rating scores. On the other hand, we could not obtain any significant associations between profitability ratios, operating efficiency ratios and corporate governance levels of the firms.

Keywords : Corporate governance, firm performance, accounting ratios, liquidity ratios, Borsa Istanbul (BIST) Corporate Governance Index (XKURY)

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