ASSOCIATION BETWEEN CORPORATE GOVERNANCE AND FRAUD DETECTION: EVIDENCE FROM BORSA ISTANBUL

Yıl 2019, Cilt: 6 Sayı: 2, 95 - 101, 30.06.2019

Can Tansel Kaya Burcu Birol

https://doi.org/10.17261/Pressacademia.2019.1048

Öz

Purpose- Corporate Governance establishes valuable pillars in order to guard shareholders’ interests by the use of firm governance devices. It is evidently a philosophy rather than a palliative solution. However, while there is some evidence to prove that corporate governance enhances corporate performance and fraud detection; such hypotheses has not been tested within Borsa Istanbul. The aim of this paper is to make an attempt to investigate whether there is an association between corporate governance practices and detecting fraud.

Methodology- A logistics regression model is constructed with non-financial data. The analysis contains categorical dependent data which needs a binary response model. 134 firms from manufacturing industry of Borsa Istanbul construct the data set.

Findings- No evidence found about the impacts on selected corporate governance activities on the risk of financial statement frauds.

Conclusion- Although it was assumed that corporate governance applications have an effect to lessen the manipulations on financials at the beginning of the study, test results are not sufficient to prove the relationship. Nevertheless, existence of such practices are good messages of companies about their attitudes toward fraud.

Anahtar Kelimeler

Corporate governance, Fraud, Borsa Istanbul, Corporate governance index

Kaynakça

• Abbott, L. J. and Parker, S., 2000. Auditor selection and audit committee characteristics. Auditing: A Journal of Practice and Theory. 19(2), 47-66. DOI: 10.2308/aud.2000.19.2.47
• Accounting Industry Reform Act (Sarbanes-Oxley Act –SOX), 2002 (2016, February 10). Retrieved from http://www.soxlaw.com/
• Akdemir, Ç, 2010. İşletmelerde hile riski ve Türk işletmelerinde hile riskinin ölçülmesi ve değerlendirilmesi. (Unpublished master dissertation), Marmara University, Turkey.
• Allison, P., 2013. What’s the best R-squared for logistic regression? (2016, November 12). Retrieved from http://statisticalhorizons.com/r2logistic
• Borsa Istanbul, 2016. BIST Corporate Governance Index (XKURY). (2016, February 13). Retrieved from http://www.borsaistanbul.com/en/indices/bist-stock-indices/corporate-governance-index
• Bouheni, F.B., Ammi, C. and Levy A., 2016. Banking governance, performance and risk-taking, conventional banks vs Islamic banks. John Wiley & Sons, Inc.
• Brown, L. D. and Caylor, M. L., 2004. Corporate governance and firm performance. 15th Conference on Financial Economics and Accounting, University of Missouri, and Penn State University.
• Capital Markets Board (CMB)., 2003a. Corporate governance principles. (2016, February 11). Retrieved from http://www.spk.gov.tr/indexcont.aspx?action=showpage&menuid=10&pid=0
• Carcello, J., and Neal, T., 2000. Audit committee composition and auditor reporting. The Accounting Review 75(4), 453-467. DOI: 10.2308/accr.2000.75.4.453
• Donaldson, T., 2007. “Ethical blowback”: The Missing Piece In The Corporate Governance Puzzle–The Risks To A Company Which Fails To Understand And Respect Its Social Contract. Corporate Governance: The international journal of business in society, 7(4), 534-541. DOI: 10.1108/14720700710820614
• Dorata, N., and Petra, S., 2011. Corporate governance, restricted stock awards, and IRC Section 83 (b) election. Corporate Governance: The International Journal of Business in Society, 11(1), 54-63. DOI: 10.1108/14720701111108844
• Farber, D. B., 2005. Restoring trust after fraud: Does corporate governance matter? Accounting Review, April (80), 539-562. DOI: 10.2308/accr.2005.80.2.539
• Fraud. (n.d.). In Black’s Law Dictionary. (2015, December 15). Retrieved from http://thelawdictionary.org/fraud/
• Gillian, S. L. and Starks, L. T., 2003. Corporate governance, corporate ownership and the role of institutional investors: A global perspective. John L. Weinberg Center for Corporate Governance, (University of Delaware, Working Paper 2003-01).
• Handley-Schachler, M., Juleff, L., and Paton, C., 2007. Corporate governance in the financial services sector. Corporate Governance: The international journal of business in society, 7(5), 623-634. DOI: 10.1108/14720700710827202
• Kirkos S., Spathis C. and Manolopoulos Y., 2007. Data mining techniques for the detection of fraudulent financial statements. Expert Syst Appl 32(4), 995–1003. DOI: 10.1016/j.eswa.2006.02.016
• LaPorta, R., Lopez-De-Silanes F. and Shleifer A., 1999. Corporate ownership around the world. The Journal of Finance, 58(1-2), 3-27. DOI: abs/10.1111/0022-1082.00115
• Kaya, C. T. and Aslan, L., 2013. A Research on the Association between Corporate Governance and Corporate Performance in Turkish Energy Sector. GSTF Business Review (GBR), 3(1), 167.
• Mandacı, P.E. and Kahyaoğlu, S.B., 2012. The role of internal auditing and corporate governance in enterprise risk management: Empirical evidence on non-financial firms listed in Istanbul Stock Exchange. The World of Accounting Science, 2012(1), 43-66.
• The Institute of Chartered Accountants in England and Wales, 1992. The Cadbury Report. (2016, February 11). Retrieved from http://www.icaew.com/en/library/subject-gateways/corporate-governance/codes-and-reports/cadbury-report
• The Organization for Economic Co-operation and Development (OECD), 1999, 2004. Principles of Corporate Governance. (2016, February 11). Retrieved from www.oecd.org/daf/ca/Corporate-Governance-Principles-ENG.pdf
• Wooldridge, J. M., 2012. Introductory econometrics a modern approach. South- western Cengage Learning.
• Xue, H., 2008. The impact of corporate governance on the choice of transfer pricing methods in China. (Unpublished master dissertation). Lingnan University, China.