Corporate Governance Rating Methodology
Corporate Governance Rating Methodology
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Generally, all institutions, specifically companies, should be “Well Managed” so that they achieve their goals as fast as possible with minimum costs. In other words, good governance is the process of realizing the goals in an effective and efficient manner. This concept is much more important for companies that wish to live profitably for generations. In order for the large-scale companies in particular to survive for a long time with sustainable profitability, they should deliberately implement good governance practices.

Corporate Governance actually refers to good governance practices. As a general definition; Corporate Governance is “a set of managerial practices that will resolve conflicts of interest between the company, shareholders, managers and stakeholders, in order to survive for a long time with a sustainable level of profitability.”. As evident from the definition, three factors become prominent.

  • Shareholders
  • Managers
  • Stakeholders

Shareholders are the natural and legal persons that keep the stock shares of the company.

Managers include the members of the board of directors who do not own shares and the senior managers.

Stakeholders consists of the company employees, customers, raw material suppliers, creditors, public authorities and society in general.

In order to survive for generations with a sustainable profitability, which is the ultimate goal, eliminating or minimizing the conflicts of interest via reconciliation stands out as the main problem. And in order to resolve this problem, some good practices that fit the company’s structure need to be implemented. Risk management system, internal control system, independent external audit, definition of duties and responsibilities, and assignment and securing of the rights of stakeholders can be listed as examples for such practices.

  • Making written regulations within the company
  • Establishing systems required by such regulations
  • Operating these systems that are established

Written company regulations and the systems that are established are surely crucial. However, the real benefit from the practices depends on the effective operation of the established systems.


JCR ER carries out its Corporate Governance rating activities on a global scale with a flexible methodology that takes into account the variability of local regulations and local cultural differences between countries under the general coverage of international rules. In this context, in terms of JCR ER, the corporate governance rating in Türkiye is a rating activity that reveals the extent to which a company complies with the CMB (Capital Markets Board) Corporate Governance Principles.

During the rating process applied in Türkiye, the companies’ board of directors, senior management, relationships between management and stakeholders, transparency and other governance activities regarding corporate governance are examined and rated in accordance with the methodology. The rating that is determined at the end of the process is a symbol that indicates how much the company complies with the CMB principles. In addition, a rating report including the reasons for the rating given is disclosed to public with the rating.

The analytical framework and the underlying details of the CMB Corporate Governance Principles Compliance Rating can be found in detail below.

The CMB Principles, published in 2005, are an advisory guide that has been prepared especially considering publicly traded companies. It consists of four main sections and 26 subsections under those sections. The main sections are as follows.

  • Shareholders
  • Public Disclosure and Transparency
  • Stakeholders
  • Board of Directors and Managers

The points of reference of the examinations are conducted by highlighting the principles of fairness, transparency, accountability and responsibility.

During the process of Corporate Governance Principles Compliance Rating, the country and sector analyses applied in our macro analysis credit rating processes are taken into consideration in the assessments in addition to the management practices of the company.

When examining the market infrastructures; it is checked whether the company partners have a significant ownership concentration on a country level and in other sectors, especially whether it has state ownership, and financial-real sector groups. In addition, whether it is a family business, whether it is publicly traded, its share in the stock markets if it is public, the degree of its role and share in the market, developments affecting ownership in other countries and public practices, and the interest of institutional investors in the company are taken into consideration. Also, the state of the country’s banking sector, the transparency on a country level, economic stability of the country, natural and political environment and similar issues are considered. The measurement of the compliance degree of the country market between the regions and the degree of inclusion of the company’s geographical position are based upon. The degree of harmony between the regions of the country's market and the measurement of the degree of comprehensiveness of the geographical location of the company are taken as basis.

While examining the legal environment structures; the company law which regulates the rights and responsibilities between the shareholders-stakeholders-management, and legal regulations pertaining to corporate governance principles are especially taken into consideration.

The dominance of the regulatory environment and the regulatory bodies over the market, their quality of regulation and legal positions, the presence of non-regulated areas, the practical proximity with the markets and guidance, legal changes that have not become law at the time of the examination but are on the agenda and their reasons are the most important criteria to be considered.

Although the principles of accountability and public disclosure differ from country to country, the position of the auditing companies within the country, their adequacy and effectiveness, the validity of international rules in the auditing principles, consolidation principles and rules, valuation and cash flow rules, public disclosure principles are generally taken into consideration in terms of the country. And in the company analysis the ratings and valuations are carried out under the titles below.


  1. Facilitation of Exercising the Rights of Share Ownership
  2. Right to Demand Information and Examine
  3. General Assembly
  4. Right to Vote
  5. Minority Rights
  6. Profit Share Right
  7. Transfer of Shares


  1. Corporate Website
  2. Annual Report


  1. Company Policy Regarding Stakeholders
  2. Supporting the Participation of Stakeholders in the Company Governance
  3. The Company’s Human Resources Policy
  4. Relationships with the Customers and Suppliers
  5. Code of Ethics and Social Responsibility


  1. The Function of the Board of Directors
  2. The Principles of Operation of the Board of Directors
  3. The Structure of the Board of Directors
  4. The Form of the Board of Directors Meetings
  5. The Committees Established within the Board of Directors
  6. Financial Rights Granted to the Board of Directors Members and Managers with Administrative Responsibility

The ratings are based on the information obtained from the institution being rated and from other sources. No ratings are given by JCR ER unless information is accessed. During the rating process, the statistical analyses are obtained for the rating to be given by sticking to the principles of fairness, transparency, accountability, responsibility and goodwill.

In the rating of the compliance with the corporate governance principles; a rating on a scale of 1 to 10 is given within the integrity of the standards.

In terms of Corporate Governance, within the scope of compliance with the principles, a rating of 1 represents the most negative position, and a rating of 10 represents the strongest position.

In order for the companies listed in the Borsa Istanbul (Istanbul Stock Exchange - BIST) (except for the watchlist markets) to be included into the BIST Corporate Governance Index, must have a compliance rating of at least 6 (six) to all principles in terms of compliance with corporate governance principles and rules.

For the Shareholders,30 topics and 70 standards in total for the 8 subsections specified are examined and are made into questions, and the answers are searched by JCR ER. The weight ratio within the total for the shareholders is determined as 25% by the CMB.

For Public Disclosure and Transparency,26 topics and 53 standards in total for the 6 subsections specified are examined and are made into questions, and the answers are searched by JCR ER. The weight ratio within the total for this section is determined as 25% by the CMB.

For the Stakeholders,15 topics and 23 standards in total for the 6 subsections specified are examined and are made into questions, and the answers are searched by JCR ER. The weight ratio within the total for the stakeholders is determined as 15% by the CMB.

For the Board of Directors,55 topics and 100 standards in total for the 6 categories specified are examined and are made into questions, and the answers are searched by JCR ER. The weight ratio within the total for the board of directors is determined as 35% by the CMB.


JCR ER gives ratings between 1 and 10 to the companies that it rates. Rating scale is divided into 5 main levels of; 

  • A(tr) [Very High Compliance], 
  • B(tr) [High Compliance], 
  • C(tr) [Medium Compliance], 
  • D(tr) [Low Compliance], 
  • E(tr) [Very Low Compliance] 

Also, the 3 highest levels which are Very High Compliance, High Compliance and Medium Compliance divided into three subsections each and these sections are indicated with lower case letters. For instance, the A(Tr) level is divided into 3 subsections that are indicated with the ‘aaa’, ‘aa’ and ‘a’ from high to low. You can find between which ratings that all levels fall and what they mean on our website’s notations page.

JCR ER also gives outlook ratings by including the possible developments during the 12-month monitoring process into the rating. The positive developments that are expected are rated with the ‘positive’ outlook, and the negative ones with the ‘negative’ outlook. In the event that there are no expectations, the institution being rated has the outlook of ‘stable’.