Impact of corporate governance practices on financial performances of companies: An application on manufacturing companies traded in BIST

The purpose of this study is to analyze the impact of corporate governance practices on financial performances of companies traded in Borsa Istanbul (BIST). The study made use of data of 136 firms continuously active in BIST manufacturing industry between 2002 and 2012. As for corporate governance practices, variables related to board structures and ownership structures of companies have been utilized in the study. Accounting-based and market-based performance indicators and financial distress indicator have been taken into account as performance criteria. In the study, panel data analysis was used and robust estimator developed by Beck-Katz(1995) was preferred. As a result of analyses, positive correlation between board size, number of female directors and return on assets was found. In addition, it was observed that as level of CEO ownership and foreign ownership increase, Tobin's q rate increases at the same time. After all, increasing level of managerial ownership makes risk of financial distress decrease. Findings of the research are important for investors, researchers, executives of business and people who makes financial adjustment.