With regulations on corporate governance set forth by the Capital Markets Board, in line with the developments taking place worldwide, an obligation to have independent board members on the board of directors is born. While improving the corporate governance standards of a company, this regulation also positively contributes to the economy of the country as a whole through positively affecting its foreign direct investments. Since independent board members are expected to take influential roles in the key areas of a company such as strategy setting, performance evaluation, risk taking and human related issues; an effective independent board member should possess technical as well as interpersonal skills. The main purpose of this paper is to analyze the significance of "independent board members" that has a substantial role in the implementation process of corporate governance rules in Emerging Markets like Turkey.
It is generally assumed that the corporations in emerging markets are more sensitive to financial distress arising from global crisis than their counterparts in developed countries because of a lower level of institutionalization and governance structure. Parent companies need to build effective corporate governance to overcome the effects of a global economic crisis, considering the drawbacks of an emerging market. The study aims to understand the relation between the capital structure of ultimate parent companies with corporate performance of the affiliates in an emerging market, Turkey, for the period between 2008-2013. The paper divides this period into a pre-economic crisis period of 2008-2010 and a post-economic crisis period of 2011-2013. The ANOVA results revealed that business group affiliates had a higher financial performance and firm value and were more innovative compared to the non-affiliates. The regression analysis showed that the degree of control of the group by the affiliated firm was positively associated with firm value for both the years of crisis and those of recovery periods. The analysis also posits that professionalism in management was positively associated with the affiliates' value in recovery periods. Innovativeness was another variable which contributed positively to value.
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