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Abstract:
This article examines causality relationships between stock markets and economic growth based on the time series data compiled from 20 countries for the years 1981 through 1994. Sims' causality test based on Granger definition of causality was used. At first, panel data covering all countries over the entire analysis period were used to detect the direction of causation. Secondly, causal relations were investigated for each country,in isolation, using the respective time series data.

Analysis based on the panel data revealed a two-way causation between stock market development and economic growth. Country analyses, on the other hand, could not lead to precise conclusions, but suggested a somewhat stronger link between stock market development and economic growth in developing countries.

stock market development, economic growth, financial development

Abstract:
The main purpose of this study is testing weak-form market efficiency hypothesis in ISE using the broadest sample and time series coverage that have been ever used. We use stock prices data of all companies that constitute ISE-100 index with time series covering 1990-2002 years. We test not only whether ISE is efficient in the weak-form sense, but also whether and how it is becoming more efficient. For this purpose, we use generalized auto-regressive conditional heteroscedastic (GARCH) model.

Our research findings show that the stock returns of the individual stocks that constitute 65% of the sample space do not show random walk behavior. However, remaining part of the individual stocks exhibit significant random walk behavior. The findings for the ISE-100 national index provide support to the evolving market efficiency hypothesis. While ISE-100 index do not follow random walk for the initial period of the analysis, it gains random-walk behavior in the second period. The discrimination analysis between stocks whose returns do not follow random walk behavior and those whose returns follow random walk behavior do not significantly discriminate them.

market efficiency, istanbul stock exchange, GARCH

Abstract:
This paper examines the synergy created in the merger process, its sources and factors that influence its magnitude using a sample of 56 mergers from U.S. industries completed within 1992-1997. Research findings indicate that mergers are resulting in the synergy gains, which is measured by operating cash flows relative to the industries. The cash flow increases do not come from gaining monopoly position and cutting capital investments and labor cost. The cash flow improvements come from the more productive usage of assets in generating sales. The subsample studies show that cash flow improvements are particularly strong in high overlap, equity-financed, value and larger merger subsamples.

merger, postmerger performance, takeover, synergy

Abstract:
This article examines causality relationships between institutional investors and stock market development based on the panel data compiled from 23 OECD countries for the years 1982 through 2000. In order to test causality relationship, Sims' causality test based on Granger definition of causality was used in our study. Our empirical results provide evidence that there are statistically significant positive relationship between institutional investors and stock market development. The development of institutional investors is the Granger cause of stock market capitalization, whereas there are bi-directional causality relationship between institutional investors' development and stock market liquidity. Research results support the idea that a country should promote the development of institutional investors for the establishment of well-developed securities market.

institutional investor, institutional investor development, stock market development, financial development, Granger causality

Abstract:
We have examined macroeconomic transmission mechanism by analyzing the interaction process between macroeconomic forces and financial performance variables of small and medium-sized enterprises (SMEs) in Turkey employing panel data regression method. Our empirical analysis indicates that the profitability of SMEs is declining and business risk is increasing as real exchange rate appreciates as a result of the exchange rate anchored stabilization policies. High interest rates prevalent in the Turkish economy also push SMEs to stay liquid instead of going to the investment. This finding provides support to the complementarity theories which suggest that companies choose between investing their funds to the financial assets or real assets. Since the investment in the financial assets finances the soaring public sector borrowing requirements, it doesn't immediately channel back to the real economy. As expected GDP growth rate and growth in industrial production index promotes the profitability of the real economy and decreases its business risk.

SME, small and medium sized enterprises, macroeconomic stabilization programs, Turkey

Abstract:
This paper analyzes the effects of the full deposit insurance system introduced in 1994 on the financial performance of Turkish commercial banks using the experimental design approach. The research findings support the moral hazard hypothesis. The findings indicate that banks subject to moral hazard behavior show significant increases in foreign exchange position risk and deterioration in capital adequacy relative to their benchmark after the introduction of the full deposit insurance system. This excessive risk-taking is related to the moral hazard behavior by commercial banks. The research results indicate that the complete deposit insurance system distorts the incentive structure of commercial banks and thus prevents the proper functioning of the market discipline mechanism and leads to excessive risk-taking.

Banking, Deposit Insurance, Moral Hazard

Abstract:
This paper examines the post-privatization performance of privatized companies in the Turkish cement industry. The findings indicate that, when performance criteria for both the state and private enterprises are considered, privatization in the cement industry results in significant performance deterioration. Total value added and the return on investment declines significantly after privatization. This decrease mainly stems from deterioration in asset productivity. The decline in asset productivity, however, is not caused by an increase in capital investment, since postprivatization capital investment did not change significantly. Significant contraction in total employment and an increase in financial leverage after privatization are among the key research findings. Privatization through public offering, gradual privatization and domestic ownership are found to stimulate the financial and operating performance of firms following privatization.

privatization, Turkey, cement industry, ownership structure

Abstract:
This study examines the factors affecting ethical judgment of financial and accounting practitioners in Turkey. Our research findings show that there is no significant relationship between importance given to the code of ethics and ethical judgments of Turkish accounting and financial executives, though they generally agree that the code of ethics provides adequate guidance to resolve ethical dilemmas. The most effective factors on the ethical judgments are the environmental factors. We found marginal support for the effects of corporate ethical values on the ethical judgments. The effects of the age of practitioners on their ethical judgments are two-way. This study on Turkish experience produces results different from the study by Martinson and Ziegenfuss (2000) which employed similar methodology over the case of United States. The most effective factor affecting ethical judgments in Martinson and Ziegenfuss (2000) is the importance given to the code of ethics, whereas we found no relationship between these two variables. This difference is attributed to the special characteristics of emerging economies.

Ethics, Ethical Judgments, Ethics in accounting, Ethics in finance, Turkey

Abstract:
This paper hypothesizes that Asian crisis has severely affected the financial dimensions of the Turkish industries. The analysis of the financial data for 70 companies from textile, food and cement industries provides evidence to partially support this hypothesis. By principal components analysis we identified five statistical factors that is meaningful and economically significant to represent main financial dimensions contained in twenty-one financial variables of the sample firms. The discriminant analyses based on the identification of the discrimination between financial dimensions of the sample firms for pre- and post-crisis years identified that profitability margins of the export-oriented Turkish textile industry significantly decreased in post-crisis years. No statistically significant changes in financial dimensions are detected for food and cement industries in post-crisis years.

Asian Crisis, Turkish manufacturing industries, contagion effect, factor analysis

Abstract:
This paper examines the premerger discrimination between acquirers and targets using a sample of 56 mergers from U.S. economy. The research findings indicate that acquirers and targets discriminate in terms of size, liquidity and cash flow dimensions, while no statistically significant discrimination are detected in terms of growth potential, past market returns and operating efficiency. The subsample studies show that diversifying mergers aim to exploit cash flow potential of targets, whereas related mergers focus on growth potential. The premerger financial properties of acquirer and targets bear informational clues about method of payment in mergers. Strategic analysis of portfolio shifts show that value acquirers aim to purchase companies with higher growth potential, whereas growth bidders aim to purchase companies with stronger cash flow record.

merger, premerger discrimination