The impact of corporate governance on corporate financial performance: Cases from listed firms in Turkey

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

This paper examines the effect of corporate governance on corporate financial performance in Turkish firms from 2008 to 2018. Therefore, the objective of the paper is still highly contentious (Ahmed, Alabdullah, Thottoli, & Maryanti, 2020). The generalised method of moments (GMM) technique is employed. The findings show that the board independence ratio is significantly positively related to all performance measures in both the short-run and long-run periods. Ownership structure depicts a significant positive link between return on assets (ROA) and Tobin’s Q (significantly negative to return on equity — ROE) in the short run. In the long run, ownership structure and Chief Executive Officer (CEO) duality significantly foster ROE and ROA, but significantly lower Tobin’s Q. CEO duality is significantly negatively related with ROA and Tobin’s Q, although insignificant, but significantly positively linked with ROE in the short run. Audit quality develops a significant negative connection with ROA in the short run although significantly positive with both ROE and Tobin’s Q. In the long run, audit quality significantly fosters all the financial performance proxies. Corporate governance rating is significantly positively linked with ROA, although just positive with ROE in the short run only, but is significantly negatively related with Tobin’s Q in both periods.

Keywords: Audit Quality, CEO Duality, Board Independence Ratio, Corporate Governance Rating, Ownership Structure, Return on Assets (ROA), Return on Equity (ROE), Tobin’s Q

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: M41, M48, M49

Received: 25.05.2021
Accepted: 03.05.2022
Published online: 05.05.2022

How to cite this paper: Ganda, F. (2022). The impact of corporate governance on corporate financial performance: Cases from listed firms in Turkey [Special issue]. Journal of Governance & Regulation, 11(2), 204–217. https://doi.org/10.22495/jgrv11i2siart1