Interactions between Business Conditions andFinancial Performance of Tourism Industry in Turkey

ABSTRACT: This thesis searches the empirical association between financial performance and business conditions in the tourism industry of Turkey, which has shown tremendous development in international tourism apart from 1980s. Business conditions are proxied by industrial value added and real income, while financial performance is proxied by value weighted stock price index of large tourism firms who trade in Istanbul Stock Exchange. Using a quarterly data from 1991:Q1 to 2011:Q2, results confirm the long term equilibrium relationship between financial performance of tourism firms and business conditions in Turkey. Stock prices converge to its long term equilibirum level by 20.45 percent at the end of every quarter by the contribution of business conditions. Finally, results of the present study suggest undirectional long term causality that runs from business conditions to financial performance of tourism firms in Turkey, which means that any change in business conditions preceedes a change in financial performance in the tourism industry of Turkey. Keywords: Financial Performance; Business Conditions; Tourism Industry; Causality Analysis; Turkey. ……………………………………………………………………………………………………………………………………………………………………………………………………………………