The effect of independent auditor's opinion on share performance in the framework of the financial structure of banks

In today's conditions, strengthening the financial structures of banks is an issue that increasingly becomes important. Their strong or weak financial structures affect banks' performance. In addition to this, audits of banks and opinion reports issued by independent auditors are other factors affecting the performances of the banks. A stock certificate is a kind of valuable document issued by capital companies to their shareholders to certify their capital shares. Stocks, as one of the first investment instruments that investors think of, can show different price changes, because of market conditions, during the day. Prices, which are generally sensitive to volumetric changes in supply and demand, can be affected by other variables such as micro and macro factors. Profitability and indebtedness status, balance sheets, and sectoral performance on the company followed by the investor are counted as the micro factors. Macro factors are the economic conjuncture, international markets, international agreements, crises, and the changing structure of the world economies. The independent audit reports are submitted to the Public Disclosure Platform by banks operating as joint-stock companies in financial markets for four periods during the year and constitute a source of micro-scale company balance sheet, profitability and indebtedness status, capital structure, deposit loan balance for stock investors traded on the stock exchange. In addition, reporting of the auditor's opinion is like a corporate scorecard to interpret the current financial performance of the bank in terms of investment decisions. When the literature is reviewed, it is noteworthy that there are few studies are examining the relationship between auditor opinions and stock performance. Studies have been conducted on companies traded in various sectors listed in Borsa Istanbul, but no studies have been found on public companies traded in the banking sector. In this context, this study aims to empirically examine the effects of the independent auditors' opinion on the performance of the stocks traded in Borsa Istanbul between 2011-2020 of three different groups by TBB, banks with foreign capital, the state-owned deposit bank, and the private-capital deposit bank. In the first chapter, the historical development and financial structure of the banking sector have been examined theoretically. Also, the ratios used in the financial performance analysis of the bank and the basic financial statements are explained and, the differences between traditional and participation banks are evaluated in the first chapter. In the second chapter, the structure of the audit and audit committees in banks, the auditor reports issued as a result of the independent audit, types of opinions, key audit issues, legal regulations regarding the independent external audit of banks, Basel regulations theoretically are examined and their effects on the Turkish banking system are considered. In the last chapter, the dummy variable for the results of the auditor's opinion is used to display the effects of the auditor's opinion on the stock closing prices and index values of the selected banks, and two different stock data setting before and after the audit for the years 2011-2020 are methodically analyzed by Independent T-Test. Analyzes are applied at a 95% confidence interval. In addition, the Event Study analysis method is used to determine changes in the stock values of banks. In the study, the closing prices 10 days before and 10 days after the publishing of the auditor's opinion are analyzed with the T-Test, to interpret the variability of price volatility. With the Event Study method, a change chart is constructed by calculating the average of index values and stock closing prices. According to the findings obtained from the analysis, the opinion of the auditor has an effect on the performance and value of the stock. It is understood that a sudden jump or slight change in analyses depending on the differences of the auditors' opinions important for the corporate functions of the independent audit mechanism operating in the Turkish banking sector in the near future. The independent auditor expresses a positive opinion when convinced that the financial statements presented fairly in all material respects within the framework of financial reporting standards. The investor, who can take reasonable risks, may want to get more concrete data about the business from the report presented by the auditor, apart from the positive opinion. It can be concluded that instead of formating similar analyses for an investor, the audit report and, accordingly, the auditor's opinion should provide more detailed, realistic information rather than making up the balance sheet and financial statement that may affect investment decisions.