Abstract:

Ineffective implementation of corporate governance or having a low corporate governance understanding is shown as one of the reasons for the emergence of financial crises at micro (enterprise level) and macro level (global scale), which have increased in recent years. The role of corporate governance in the production of accurate, reliable, transparent and comparable financial information directly affects the financial performance of enterprises that are facing more and more resource constraints. In this context, the aim of this study is to determine the relationship between corporate governance practices and financial performance of 156 companies continuously traded in İstanbul Stock Exchange (BIST) during 2008-2018 period, using Dynamic Panel Data Analysis. While corporate governance rating is used as a measure of corporate governance, Return on Assets (ROA), Return on Equity (ROE) and Tobin's Q are used as proxies of financial performance. The results revealed a positive relationship between corporate governance practices and the financial performance of companies, i.e., as corporate governance of firms increases, financial performance increases correspondingly.

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