Corporate governance serves as a tool in order to ensure
accountability, transparency and responsible management on the part
of the enterprises which have increasingly been finding themselves
in a more competitive world. Such practice is not only necessary
because it results with efficiency in a world where the sine qua
non of market survival heavily depends on better and more effective
management but also because it mitigates the ill effects of corrupt
practices that might develop within the firms. Such practices might
even develop in the countries like the United States which already
have a strong culture of corporate governance. The Enron
case, which had resulted with the demise of the firm alongside with
Arthur Andersen and the morally very dubious practices of some of
the banks such as Goldman Sachs which had resulted with a disaster
for the customers but with a lucrative business cycle for the banks
themselves clearly illustrate that corporate governance is a dire
need not only for the mid or small size companies but also for the
well established giants of their respective industries.
Emerging markets like Turkey needs foreign capital to cover
their current account deficits which poses a serious problem for
their economies. One of the most important safeguards that the
foreign investors seek is the corporate governance practices that
foster accountability and transparency. Especially important to
mention here is the changing attitude of the family owned firms in
Turkey. The former generation of owners was much more prone to
conduct their businesses as they wish without paying any heed
to the principles envisaged for better corporate governance.
However the younger generation of owners had found themselves to be
confronted with a market based on stiff competition. Hence their
focuses' are much more geared towards M&A activities which
inevitably requires better corporate governance to make sure their
companies survive in such a competitive market. Accountability,
transparency, responsive and responsible administration inevitably
gained a new importance for such companies.
Regulatory framework in recent years has evolved to reflect the
changes of mentality of the new business elite in Turkey who is
much more conducive to corporate governance compared to its
predecessor. Capital Markets Board issues the necessary directives
to ensure better corporate governance for the Turkish companies.
Especially important in this regard is the transformation of the
nature of the Capital Markets Board's directives from being
only advisory legislations to being binding legislations. When the
binding of the directives combined with strict auditing and
accounting standards that Capital Markets Board imposes on the
Turkish companies, better corporate governance has gradually became
a more attainable goal for the Turkish business. Other
measures taken by the Capital Markets Board includes transparency
in the sense of establishment of a separate department to better
inform the stakeholders, the public and disclose information
regarding the salaries of the CEO's and the fiscal status of
the respective companies.
The American experience of corporate corruption and decay should
serve as a signal for all companies and investors which are looking
to operate in a better regulated and more transparent market. The
existence of corporate corruption and decay even in such a country
like the United States which already has a business culture of
transparency and responsible corporate governance illustrates how
urgent is the need for regulations for better corporate governance
practices. Turkey as an emerging economy which seeks to establish
investor confidence has already initiated the process of issuing
regulations through Capital Markets Board.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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