ABSTRACT
This chapter aims at explaining the particularities of the corporate governance system in Turkey as an emerging market and discussing them from the perspective of new institutional economic theory. First, the ownership structure in Turkish companies will be explained, as a major determinant in the design of corporate governance principles (I). Second, the formal and informal institutions affecting corporate governance will be identified from the perspective of new institutional economic theory. Controlling shareholders are usually families, which constitute an informal institution with cultural values and beliefs affecting the way firms are governed (II). Formal institutions on the other hand are laws and regulations that shape corporate governance in Turkey (III). They play an important role by imposing mandatory rules in response to resistance to change of organizations. The next two sections will elaborate on some aspects of the corporate governance rules as they apply for only listed companies (IV) or for both listed and non-listed companies (V) and how these formal institutions try to resolve the agency conflict arising from concentrated ownership. The chapter will conclude with a discussion of the developments resulting from the interplay between the organizations and institutions.
