THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE COMPLIANCE RATINGS AND FINANCIAL PERFORMANCE: AN INVESTIGATION ON BANKS LISTED IN BORSA ISTANBUL CORPORATE GOVERNANCE INDEX

Abstract

The aim of this study is to determine the efficiency and financial performance levels of six banks listed in Borsa Istanbul (BIST) Corporate Governance Index by using DEA (Data Envelopment Analysis) and TOPSIS (Technique for Order Preference by Similarity to Ideal Solution) methods which are Multi Criteria Decision Making Models and to compare the obtained scores with the corporate governance compliance scores that banks take from several credit rating agencies. In applying DEA and TOPSIS methods; DEA-Solver-LV (Data Envelopment Analysis Solver), a special software, and Microsoft Office Excel program are used. The financial ratios considered as financial performance indicators are determined according to the related literature and banks are ranked by measuring their efficiency and performance levels. After these scores are determined, the findings are evaluated by comparing with the corporate governance compliance scores. According to the findings; it is seen that the banks’ efficiency scores and financial performance rankings do not show parallelism with the corporate governance compliance scores completely.