Analysis of the Effect of Corporate Governance on the Financial Performances of Businesses and an Application on Bist

Abstract

Purpose – The study is to investigate whether the companies with the corporate governance index traded in the BIST affect the performance. The study was created to investigate the level of the relationship between corporate governance and return on assets and equity, and whether there is a significant effect on the performance of businesses that have the corporate governance index. Design/methodology/approach – Out of 16 companies within the scope of corporate governance index between 2010-2020;were evaluated using business performance criteria.The performance criteria based on are determined as ROA(the ratio that shows how effectively all assets and investments of the enterprises are used) and ROE( the ratio that measures the return on equity and the profitability per unit of the funds).Panel data analysis was applied. Finding – It was determined that corporate governance ratings were associated with failure. Discussion – Today,businesses are going through financially troubled times.In order to cope with these problems,businesses can predict financial failure and minimize the negative effects of this challenging process.In this case,businesses felt the need to concentrate on studies based on failure estimation.By establishing a connection between the variables with panel data analysis,we see which variable affects another variable and how,this method is widely used in measuring financial failure.