The Relationship between Corporate Governance and Profitability: A Study in Borsa Istanbul, Turkey

Abstract

Interest in the concept of corporate governance has increased dramatically in recent years, especially after scandals and crises in major international companies around the world, and also, profitability is one of the most important things that companies and their shareholders care about, as it is the criterion that shows the success and efficiency of management in leading investment, and profitability is the main goal of any An investor in any investment, as the biggest concern for any investor is to get the largest possible return on his investment. Therefore, work has been done through this study to discuss these two important concepts in one research, by studying the relationship between them, and corporate governance was considered as the independent variable and profitability as the dependent variable. The study was carried out on the companies listed within the corporate governance index at the Borsa Istanbul in order to ensure the existence of a relationship between corporate governance and profitability. For the purposes of completing the study, statistical processes were used, such as regression analysis, ANOVA analysis, and correlation analysis. The study sample included 43 companies listed in the corporate governance index that have a corporate governance rating for eight years from 2013 to 2020, as the corporate governance index It currently contains 52 companies, but not all companies have ratings for eight years, as some of these companies are recent in the index. Through the use of the SPSS statistical program in data analysis, the result of the study was that there is no clear and direct statistical relationship between corporate governance and corporate profitability. At the end of the study, the researcher made some recommendations, the most important of which is the necessity of obligating all companies on the Borsa Istanbul to conduct an evaluation of their governance by recognized rating companies, because of the great impact of governance on companies’ commitment to disclose transparently and not to manipulate and fraud with information and data, and recommended that studies Others on the relationship of governance with other non-profit matters in order to show the impact of governance on companies, and it was recommended that companies, shareholders and stakeholders continue to be educated about the importance of governance and work to benefit from the experiences of all countries and to draw lessons from the results that reached its application.