Corporate Governance in Turkey: an introduction to the Special Issue1

• DOI: http://doi.org/10.1111/j.1467-8683.2006.00502.x
• Author: Melsa Ararat,B. Burcin Yurtoglu
• Published date: 01 July 2006
• Date: 01 July 2006

EDITORIAL

201

© 2006 The Authors

Journal compilation © 2006 Blackwell Publishing Ltd, 9600 Garsington Road,

Oxford, OX4 2DQ, UK and 350 Main St, Malden, MA, 02148, USA

Volume 14 Number 4 July 2006

Blackwell Publishing IncMalden, USA

CORGCorporate Governance: An International

Review0964-8410Blackwell Publishing Ltd. 2006

2006144••••ORIGINAL ARTICLES

EDITORIAL

COPRORATE GOVERNANCE

*Melsa Ararat, Director, Cor-

porate Governance Forum of

Turkey, Sabanci University,

Graduate School of Manage-

ment, Orhanli, Tuzla, Istanbul

34956, Turkey. Tel (Turkey):

+

90

216 483 9710; Fax (Turkey):

+

90

216 483 9715. Tel (UK):

+

44 207

739 2564; E-mail:

melsaararat@sabanciuniv.edu

**B. Burcin Yurtoglu, Univer-

sity of Vienna, Center for

Business Studies, Department

of Economics, Room 222BWZ,

Brünner Str. 72, A-1210 Vienna,

Austria. Tel:

+

43 1 4277 37482;

Fax:

+

43 1 4277 37498; E-mail:

burcin.yurtoglu@univie.ac.at

Corporate Governance in Turkey: an

introduction to the Special Issue

1

Melsa Ararat* and B. Burcin Yurtoglu**

Over the last two decades considerable atten-

tion has been devoted to differences in the

institutional structures of countries and the

effects of such structures on corporate perfor-

mance. An important branch in this literature

brings together comparisons of financial and

legal systems, a branch for which increasingly

the term “corporate governance” is used.

An overwhelming proportion of this litera-

ture has concentrated on developed countries

with sophisticated financial and legal systems.

Much less research has been conducted on the

determinants and effects of corporate gover-

nance structures that are found in developing

and/or emerging market economies and on

the dynamic evolution of these determinants.

Together with the large-scale privatisation and

deregulation that took place over the last two

decades in these economies, the Asian crisis

in mid 1997 added a new dimension to the

importance of these issues. Academic research

(Singh, 2003) and some influential economic

analysis, including that of the IMF (1998) and

leading US officials (Summers, 1998), suggest

that the fundamental causes of the Asian crisis

lay not so much in the macroeconomic imbal-

ances, but rather in the normal microeconomic

behaviour of microeconomic decision-makers

in these economies. This type of (structuralist)

analysis of the Asian crisis emphasises the lack

of competition and the lack of sufficiently

strong corporate governance structures as the

major reasons of the crisis.

While in recent years this picture has

changed dramatically for the crisis-hit coun-

tries,

2

we still lack systematic studies on other

emerging countries such as Turkey. Deficien-

cies in data on institutional frameworks and

firms, as well as the methodological issues

such as simultaneity and endogeneity, hamper

the deepening of our understanding of corpo-

rate governance issues in these countries. Not

long ago, 50 researchers came together at the

World Bank to discuss issues related to cor-

porate governance research in developing

and emerging markets and concluded that

“ownership structures, and legal and eco-

nomic environments . . . pose challenges to

reform and [their] implications for effective

strategies are not fully understood . . . There is

limited synergy between efforts in terms of

data collection, exchange of ideas and devel-

opment of a broad research agenda that tack-

les the most urgent issues from a policy

perspective.”

3

This Special Issue is an attempt to bring

together some recent work on the nature and

impact of the corporate governance regime on

corporate performance in Turkey as a case. To

put the specific country studies into a global

perspective, the Special Issue starts with two

papers, which analyse some of the issues that

arise concerning different corporate gover-

nance systems, focusing particularly on their

relevance for developing countries. These two

papers are followed by a survey of privatisa-

tion in developing countries (by William

Megginson and Natalie L. Sutter) and by an

international comparison of the ownership

structures and performance of listed and non-

listed European firms (by Stijn Claessens and

Konstantinos Tzioumis).

Five papers on specific dimensions of the

corporate governance in Turkey and its impact

on several measures of firm performance fol-

low these four international studies, which

provide an overview of corporate governance

issues around the world.

In the first paper of the international studies,

Dennis C. Mueller starts with a question that

is central to any discussion of corporate gov-

ernance systems: How well does a particular

set of institutions mitigate the various princi-

pal/agent problems that arise in a firm? After

reviewing the basic principal/agent problem,

Mueller discusses the relevance of this ques-