The Role of Better Transparency Law in Corporate Governance and Financial Markets, and Its Practicability in Legal Systems: A Comparative Study Between the EU and Turkey

Abstract

Recent developments in globally connected financial markets have heightened the need for an effective flow of information between market players. In particular, the ‘devil side of corporations’, such as the scandals of Lehman Brothers, Parmalat and Imar Bank, has stimulated the debate on the core role of a high level of transparency in corporate governance structures as well as in financial markets. The main reason for the essentiality of a high level of transparency in financial markets is that it, similar to a shop window, not only increases the attractiveness of financial markets, but also, as an ‘invisible guard’, plays a preventative role for the unexpected events. Therefore, any opaqueness is unlikely to be tolerated in these highly competitive financial markets.

The research of this thesis shows that transparency is one of the main elements for effective functioning of financial markets and a significant factor to the success of corporations. However, the creation of well- functioning transparency rules is not an easy process because it requires considerable and on-going efforts from policy-makers. In this respect, the aim of this research is to investigate how a high level of transparency plays a strategic role in corporate governance and financial markets despite its difficulties.

However, to what extent has its importance been realised by policy-makers in their respective legal frameworks? In order to understand the practicability of transparency rules, this thesis presents and compares the EU and Turkish transparency laws as case studies. Hence, it designs a theoretical framework for the importance of transparency both in corporate governance and financial markets, and assesses how idea of transparency has been converted into practice.


In order to make a comparative analysis between EU and Turkish transparency laws, this research develops the following key elements of better transparency law: a) The dual nature of transparency laws; b) The right modalities of transparency requirements; c) The key information to be made available; d) Effective bodies and institutions; e) The adaptability of relevant legal rules with recent innovations. Hence, this thesis examines the strengths and weaknesses of EU and Turkish transparency laws, and makes further recommendations based on the availability of these key elements in their respective legislative frameworks.

Thus, overall, this research aims to critically examine the discussion about the relationship between a high level of transparency, the financial scandals and recent reforms in EU and Turkish transparency laws from a comparative perspective, and to identify key elements of better transparency law for financial markets.