The Association of Economic Conditions, Tourism Expansion and Corporate Performance of Tourist Companies: The Case of Turkey

ABSTRACT: Over the past two decades Turkey has flourished prominently in terms of tourism expansion as well as economic development. The incorporation of economy and tourism have brought Turkey up to be ranked 7th in the world in number of international tourist arrivals by 2012. The aim of this thesis therefore, is to empirically investigate the association of economic conditions, tourism development and the operational performance measures of tourist-related companies in Turkey. This has been done via time series regression analysis and causality tests over a number of selected companies’ related to the tourism industry. The representative measures for economic condition and tourism expansion are GDP and number of international tourist arrivals (TA), respectively. As well the proxy variables for corporate performance include return on assets (ROA), return on equity (ROE), stock return and the overall financial performance measured by a comprehensive score. The major finding in this study reveals a long-run level (and statistically significant) relationship between economic conditions, tourism expansion and corporate performance of tourism companies. The results offer some constructive implications for Turkish government policy makers as well as owners and directors of major companies in tourism industry. Keywords: Economic growth, Tourism expansion, Co-integration, Causality, Bounds test, Turkey. ……………………………………………………………………………………………………………………………………………………………………………………………………………………