The effect of corporate governance capacity on share price and hard behavior

Within the scope of this purpose, three sub-objectives were determined within the framework of the research. The first sub-objective is to reveal the possible effects of the fixed (unchanging), upward (increasing) and downward (decreasing) movements of the corporate governance rating scores of the companies included in the Corporate Governance Index over the years, on the share price with the Case Study. The second sub-objective of the research; It is to determine whether predictable market movements are widespread by detecting the possible herd behavior in the Corporate Governance Index and 16 prominent indices in Borsa Istanbul. Finally, the third sub-purpose is; The aim is to detect possible herd behavior in companies that have a high or low corporate governance score within the perspective of herd behavior and within the determined criteria. In this context, the Christie and Huang (1995) Model, which is one of the methods of measuring herd behavior, was used in the research, followed by the Chang, Cheng and Khorana (2000) Model. According to the results of the analysis revealing the effect of the differentiation in the corporate governance rating score on the share price by using the Case Study method, it has been determined that the market, whose corporate governance score consists of fixed / up / down shares over the years, offers the participants the opportunity to earn above-average returns. From the perspective of herd behavior, no herding behavior was found according to the results of Christie and Huang (CH) (1995) Model in 16 other prominent indices in Borsa Istanbul, in particular the Corporate Governance Index, but as a result of the results of Chang, Cheng and Khorana (CCK) (2000) Model. On the other hand, herd behavior was observed in some indices. In addition, no evidence was found in favor of herd formation according to both the CH Model and the CCK Model in companies included in the Corporate Governance Index within the scope of herd behavior and grouped as high/low corporate governance score within the framework of the determined criteria.