Corporate governance rating should not be and cannot bea generously given freebee. Can every company that is willing to spend a certain amount to get rating, deserve a good rating simply because it did this?
The first notion to come to mind when corporate governance is mentioned is that those who comply with these principles have a proper and honest management understanding. Transparency, accountability, fairness, and responsibility are the four main concepts that these principles are based on.
From the perspective of minority shareholders, two main rules are necessary for these concepts to work properly and decently: one share-one vote and equal dividend.Euroshareholders (Federation of European Shareholders Associations) and the World Federation of Investors, of which we are a member, have emphasized particularly these rules from among the corporate governance principles, after years of research and unpleasant experiences.
Aftercorporate governance principles have come to be known in Turkey, there have been many institutions that put in serious efforts in this direction. Some companies have also contributed to this process by rapidlymaking amendments to theirarticles of incorporation. Later on, rating agencies have emerged and our companies got quite high grades for corporate governance as compared toworld average. Unfortunately we have observed that the ‘one share-one vote and equal dividend’ rule was not paid much attention when giving these grades.
Which corporate governance rating do you think the shares of a company, which continuously subjects investors topaid capital increase, which controls the management through privileged shares despite high free float rate, which does not pay dividends and is exposed to manipulations, deserve?Anotherpointrating agencies should take into consideration is that if a company to which they have given a very high rating goes bankrupt in some way and collapses, they canbecome the target of suits for damages from investors who bought their shares at the stock exchange.
Generously given corporate governance rating
Corporate governance rating should not be and cannot be a generously given freebee. Can every company that is willing to spend a certain amount to get this rating, deserve a good rating simply because it did this? Of course, getting a good rating is not monopolized only by large companies. There are also many small companies that sincerely believe in and protect corporate governance principles. And we believe they deserve higher ratings. For years, we have moved along on a volunteer basis in terms of compliance with corporate governance principles. The time came now for these principles to become mandatory. Especially after the experiences at companies that have been granted privileges by the government, at Çukurova-Kepez and Aktaş Elektrik… If these companies had been managed by independent board members, would we have faced the same problems? Would the government have had to seize them?These issues should be carefully thought… Nowadays, due to a conflict among the controlling shareholders of one of the largest companies in Turkey, dividends decided upon by the board cannot be distributed. The company suffers from a management gap and says it cannot make board decisions.The government should take immediate actionand bring an arrangement that will allow the absolute majority of the board to be composed of independent members.
Of course, getting a good rating is not monopolized only by large companies. There are also many small companies that sincerely believe in and protect corporate governance principles. And we believe they deserve higher ratings.
For compliance with corporate governance principles, contributions of visual and written mediaare also important. Various studies have proved that number of newspaper readers does not increase unless journalism observes ethical principles. The best example of this is Japan where there are newspapers withcirculations of 14, or 16 million in the written media. About half of the country’s population reads newspaper on a daily basis.The fact that this rate remains at the level of some 10 percent in Turkey is very disturbing in terms of the state of media. It is considered that this success in Japan results from written media’s strictadherence to corporate governance and journalism principles, and its staying away from publishing for any political purpose whatsoever.
A difficult job for financial press
In Turkey, where information and news are equal to money at our stock exchange, we have seen judicial investigations as a result of manipulation by means of media. For financial press, there is a whirlpool that it should get out of. First of all, employers of media members should give job security and protect their journalists. However, in a market in which advertisers are the dominant decision makers, how can journalists, who live in fear of being fired at any moment and face the danger of not getting their salary, make news that can be unfavorable to advertisers?When a columnist who writes ‘this workplace also pays minimum wage’ is fired and cannot find another job, how can the concept of ethical journalism exist? There are journalists sued by advertisers, and left in the lurch, too… On other hand, there are also journalists who secure advertisements through pressure and make news with this purpose in mind, and follow up business transactions for his boss. From Turkey’s perspective, it will never be possible to engage in ethical journalism within the cycle of politics-advertiser-media boss and complying with corporate governance principles at the same time. Our journalist friends can be told “Be careful when making news that can cause huge hikes and falls at the stock exchange, when writing about a company do not make news without fully clarifying the issue and avoid writing articles that can lead to manipulation.” But unless the cycle of politics-advertiser-media boss is broken, satisfactory success will not be obtained. In order to break the cycle, first of all we should create a system in which newspapers and media companies are wholly publicly-traded, there is no controlling shareholder, and these companies are fully managed by independent boards. Stock exchange investors and readers would protect such a company, and circulation and advertisements would follow each other. Political authorities would naturally respect a newspaper that is owned by the people and observes ethical values.When properly used, capital market contains the formulas that will bring optimal solutions …