Corporate governance, financial ratios and stock returns:An empirical analysis of istanbul stock exchange (ISE)

Abstract

A basic definition of corporate governance is: "The system by which organizations are directed and controlled". The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organization - such as the board, managers, shareholders and other stakeholders - and lays down the rules and procedures for decision-making. [The purpose of this study is to determine the differences between companies effecting transactions in corporate governance index and companies not included in this index in terms of financial ratios (liquidity ratios, financial structure ratios, activity ratios and stock market performance ratios) and stock returns.] Parametric (independent t-test) and non-parametric (Mann Whitney U test) statistical methods have been used for determining whether differences are available for the financial ratios and stock returns of companies.© EuroJournals Publishing, Inc. 2010.