The effects of audits of the Capital Markets Board on the returns on stocks

The most remarkable feature of the 2000s is the explosion of business scandals and the increase in the importance of corporate governance. In addition to the increase in the importance of corporate governance, the importance of the institutions that audit the enterprises has increased in this process. It is also important that audit firms prepare reports in a very transparent manner and submit them to the relevant authorities without any manipulation. The Enron scandal and the fact that the audit firm Arthur Andersen was involved in the manipulations also led to the revision and updating of the rules in corporate governance. These changes have made businesses more powerful and capital markets more reliable. As a result, the volume of funds flowing into money and capital markets increased and diversified. Evev in the past decades, many derivatives have not been known to be present, leading to investors being offered. This new formation, especially in developed countries of the world, has caused new transformations in our country as well. The most important of these are the top institutions established under the leadership of the public. The supreme boards have undertaken important tasks in the process of preventing unfair competition in the markets and providing information to investors in an accurate and transparent manner. One of these high boards is the Capital Markets Board (CMB). Within the scope of this study, firstly the general assemblies established in our country and general information about their duties are given. Subsequently, the penalties imposed as a result of the audits carried out by the CMB between January 1, 2000 and December 31, 2018 were determined. In the next stage, it was investigated whether these penalties caused any abnormal return in the stock returns of the companies. The data obtained were analyzed by using Event Study method. The market model approach was also utilized in the process of applying the event study method. According to the results, the penalties given as a result of the audits were found to cause abnormal returns on the days following the public disclosure. Abnormal returns were found to be significant in both 5% and 1% confidence intervals. This shows that the capital market in Turkey is not effective even in semi-strong form.