(Business Group Affiliation and Firm Performance: Evidence from Turkey)

Abstract

Purpose – The aim of this study is to examine the influence of business group affiliation on firm performance. Design/methodology/approach – In this study, dynamic panel data regression analysis is used to determine the association between group membership and firm performance. The estimates are based on yearly data of 271 firms for the period 2013-2017. Findings – Empirical findings of the study indicate that group membership increases a firm's accounting (ROA)and stock market performance (Tobin’s Q) measures. Our findings also imply that firm specific factors such as firm size and financial leverage effectively moderates the group affiliation-performance relationship for ROA model. Discussion – The advantages of business groups that play important roles in every economy for member firms continue to be discussed in the literature. According to the findings of the study, business groups are generally beneficial for member firms. However, the positive impact of group membership on firm performance decreases as firms grow. In addition, firms with low leverage benefit from group membership.