Determination of the relationship between corporate governance, working capital management and financial performance: An application in BIST Industrial Index

Corporate governance is the management of the firm relations with society, the board of directors, shareholders and stakeholders, taking into account the principles of transparency, equality, accountability and responsibility. Corporate governance, working capital management and financial performance are considered to be interrelated issues. In the paper; It was meant to find the relationship between corporate governance, working capital management and financial performance with a panel data analysis model. In accordance with this purpose; firms included in the BIST Industrial Index between the years 2010-2021 were determined as decision-making units. Number of independent board members, board size, number of audit committee members, chief executive officer (CEO) duality, board committees are corporate governance variables; current ratio, liquidity ratio, inventory turnover period, receivable turnover period, debt turnover period are working capital management variables; Tobin Q ratio and return on assets are financial performance variables; leverage ratio, firm age and size are the control variables. This paper was made within the framework of the main hypotheses determined to reveal the relationships between corporate governance, working capital management and financial performance of firms. As a consequence of the findings, it was attained that there was positive significant relation between the number of audit committee members with liquidity ratio, current ratio, receivables turnover period and inventory turnover period; negative significant relation between board size with debt turnover period and inventory turnover period. In addition, negative significant relation was reached between return on assets with inventory turnover period and the number of independent board members. However, between Tobin Q ratio and debt turnover period were found negative significant relationship. In conclusion; it has been observed that the increase in the number of members on the board of directors causes the inventory and debt turnover periods to decrease. In addition, it was found that the increase in the number of independent board members and the inventory turnover period caused to decrease in return on assets.