Group Affiliation and Corporate Performance: Evidence from an Emerging Economy

Abstract

This study compares overall financial characteristics of the Turkish nonfinancial firms across a variety of ownership variables. We essentially analyze the performance of affiliates of diversified Turkish business groups relative to unaffiliated firms. We find that group affiliated firms have higher return on assets than unaffiliated focused firms. This positive relationship, however, does not hold for other accounting and stock market measures of performance. Our findings also indicate that the performance measures of family-owned are not different from those of nonfamily-owned firms. Results also suggest that foreign-owned firms perform significantly better in terms of return on assets than domestic firms, but not in terms of other performance measures.

Keywords: Group affiliation; corporate performance; Turkey

JEL Classification: G32