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

Hakan Guclu

Istanbul Stock Exchange Review, 2012, vol. 13, issue 50, 45-82

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.

Keywords: Corporate governance index; index performance; index companies; corporate governance rating agencies; The views and opinions expressed in this article belong to the author and do not necessarily reflect those of the Istanbul Stock Exchange. (search for similar items in EconPapers)
JEL-codes: G39 (search for similar items in EconPapers)
Date: 2012
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Handle: RePEc:bor:iserev:v:13:y:2012:i:50:p:45-82