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Comparison of the Performance of ISE Corporate Governance Index against Performances of Two Newly Created Indices

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  • Hakan Guclu

Abstract

Companies are expected to increase their performances if they apply the corporate governance principles adopted. However, the value of the ISE Corporate Governance Index which is calculated since August 31st, 2007 to measure the price and return performances of ISE-listed companies with a corporate governance rating was 48,337.81 on December 30th, 2011, a value 2,928.81 points below the ISE-100 Index. Two new indices were calculated to verify two opinions which were put forward regarding the causes of poor performance of the ISE Corporate Governance (CG) Index. In the first index, Dogan Group companies that experienced legal problems due to tax debt and tax fine were excluded from CG Index and the index was re-calculated. In the second index, banks that are alleged to be represented insufficiently were included in the CG Index and the index was re-calculated. It was revealed that as of December 30th, 2011 the first and the second indices were higher than the ISE-100 Index by 5,519.96 and 1,583.69 points, respectively, whereas the first and the second indices were higher than the current CG Index by 8,448.78 and 4,512.51 points, respectively.

Suggested Citation

  • Hakan Guclu, 2012. "Comparison of the Performance of ISE Corporate Governance Index against Performances of Two Newly Created Indices," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 13(50), pages 45-82.
    • Handle: RePEc:bor:iserev:v:13:y:2012:i:50:p:45-82
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    References listed on IDEAS

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    1. Hardjo Koerniadi & Chandrasekhar Krishnamurti & Alireza Tourani-Rad, 2014. "Corporate governance and the variability of stock returns," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 10(4), pages 494-510, August.
    2. Vitaliy Zheka, 2006. "Corporate Governance and Firm Performance in Ukraine," CERT Discussion Papers 0605, Centre for Economic Reform and Transformation, Heriot Watt University.
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