Analysis of the relationship between performance measurement systems and corporate governance index: An application on enterprises in the corporate governance index

Growing competitive pressure, due to the effects of globalization and technological developments in the last thirty years, has revealed the inadequacy of measuring performance based on financial data only, and paved the way for the development of multi-dimensional performance measurement systems. On the other hand, global financial crises and company bankruptcies have increased the importance of corporate governance and accordingly, regulations have been made to encourage corporate governance. The aim of this study is to examine performance measurement systems and corporate governance practices, and to analyze the relationship between financial and organizational performance with corporate governance compliance scores specifically for enterprises appearing in the corporate governance index. There is quite a large number of studies both in national and world literature examining the impact of corporate governance on financial performance. However, the number of studies examining the relationship between corporate governance and organizational performance is very limited. Within the scope of the research, financial performance of 18 companies participating in the study was calculated by using the financial ratios of the year 2019 and reducing it to a single score with TOPSIS, one of the multi-criteria decision-making methods. The organizational performance of the enterprises has been determined by employing three different multi-dimensional performance measurement systems, which also take into account non-financial data. Attempting to explain the relationship between the financial and organizational performance of the enterprises appearing in the Corporate Governance Index with the corporate governance compliance notes of those enterprises, the Spearman rank correlation has been used. According to the results obtained from the year 2019 data of the companies participating in the research, it is determined that the financial performance rankings of the companies and the corporate governance ratings do not move in the same direction and there is no relationship between them, while the organizational performance rankings and corporate governance compliance scores are weak-moderate positively related at 10% significance level.