VALUE RELEVANCE OF CORPORATE GOVERNANCE TO STOCK INVESTORS: EMPIRICAL EVIDENCE FROM AN EMERGING MARKET

The aim of this study is to investigate the benefits provided by corporate governance to stock investors. For this purpose, companies which are included in the corporate governance and the dividend return indices have been examined. The data include BIST Corporate Governance Return, All Return and Dividend Return indices. Empirical analysis has been performed through OLS regression along with Beta calculations. The results of the study have shown that corporate governance has a positive impact on risk management and internal control constituents of companies. Corporate Governance Return index and All Return index decrease in parallel to each other when indices fall down (beta down). However, the decrease in the former index is less than the decrease in the latter one. Therefore, we argue that encouraging conformity to principles of corporate governance will generate benefit to shareholders and companies at micro level while also providing a more transparent investment environment and advancing the capital market