The Relationship Between The Financial Ratios And Transparency Levels Of Financial Information Disclosures Within The Scope Of Corporate Governance: Evidence From Turkey

Abstract

Even though several years have passed since the large corporate scandals of 2001 and 2002, corporate governance continues to remain an area of concern and focus in the global economy, and especially in the emerging markets. Corporate governance refers to the quality, transparency, and dependability of the relationships between the shareholders, board of directors, management, and employees that define the authority and responsibility of each in delivering sustainable value to all the stakeholders. The importance of the issue has been growing at an international level and the quality of corporate governance practices, which is deemed to be as important as financial performance in investment decisions, has become a subject of more serious consideration. In recent years the issue of corporate governance and their impacts on corporate performance have continued to gain widespread prominence in the capital market economy. Higher compliance with the corporate governance standards means more accountable and transparent companies for investors. In this framework, firstly, the transparency levels of financial information disclosures in corporate governance reports and annual reports are calculated by establishing a transparency checklist for the year 2010. MANOVA analysis is conducted to examine the relationship between the calculated transparency levels and financial ratios. The results reveal that transparency level has statistical differences among the group means of return on asset, total debt / total assets, long-term debt / total assets and corporate governance index variables.