CEU Electronic Theses and Dissertations, 2023
| Author | Atan, Mehmet Ataberk |
|---|---|
| Title | Political Connections and Business Performance: Evidence from Turkish Firms |
| Summary | I investigate the impact of political connections on the economic performance of Turkish industrial firms. I propose a novel approach to measure connections using text data, considering both textual content and associated sentiment. By collecting online news articles on firms and politicians and matching them to respective firms, I examine the effect of shocks to connections between politicians and companies, constructed through sentiment analysis. Utilizing financial data from the top 1000 industrial companies over a decade, I employ a fixed effects model to analyze the influence of these connections on profitability. My hypothesis suggests that companies with connections outperform those without connections, both in terms of average performance and additional profits. Confirming this hypothesis, the analysis demonstrates that connected companies exhibit better average performance and experience higher profits compared to non-connected companies. However, when clustering standard errors at different levels, the second result, indicating a positive influence of connections on firms' performance, does not maintain statistical significance. These findings highlight potential limitations in the conservative methodology used to construct connections, suggesting it may not effectively capture actual connections between companies and politicians. I argue that while the measured connections show a positive impact on performance, the methodology may not capture signals strong enough due to challenges in uncovering underlying business-politics ties in Turkey. Consequently, the study emphasizes the need for more sophisticated methods to unveil and measure political connections and reaffirms the role of political institutions in shaping business and economic outcomes. |
| Supervisor | Lee, Tomy |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2023/atan_mehmet-ataberk.pdf |
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