THE EFFECT OF CORRUPTION ON FIRM GROWTH: EVIDENCE FROM FIRMS IN TURKEY
Journal Title: Asian Economic and Financial Review - Year 2014, Vol 4, Issue 5
Abstract
To our knowledge, there is no micro-level study paying attention to the influence of corruption on firm growth. We aim to fill this gap in the literature. This paper therefore contributes to the limited literature on the link between corruption and firm growth in a single country, Turkey. To estimate the relationship between firm growth and corruption, we analyze a sample of 41 firms from manufacturing firms in Turkey, covering the period from 2008 to 2011 by using static panel techniques. The study find evidence that the effect of corruption level, profitability and financial leverage on the growth of the firms is significantly positive in all case, but financial risk rating is negative. We find specifically a significantly positive relation between the growth of private firms and corruption level. This leads that corruption could increase economic development, mainly because illegal practices and payments as ?speed money? could surpass bureaucratic delays; the acceptance of bribes in government employees could work as an incentive and increase their efficiency and because corruption is possibly the price people are forced to pay as a result of market failures. The results of this study provide managerial implications for industrial companies from Turkey: Company managers should increase profitability, should reach economies of scale, an optimal capital structure level and reach the optimal level of working capital level due to profitable firms grow faster than other companies. We also suggest that policy-makers improve in public governance quality and the leveling of the playing field for firms in all business sectors to reduce corruption level because firms tend to pay bribes and the time that is wasted on bureaucratic procedures and engage in corrupt practices in an attempt to promote their short-term growth by facilitating transactions in the bureaucratic process.
Authors and Affiliations
Hasan Ayaydın| Department of Business Administration, Gumushane University, Gumushane, Turkey, Pınar Hayaloglu| Department of Economics, Gumushane University, Gumushane, Turkey
Keywords
Related Articles
- EP ID EP2030
- DOI -
- Views 520
- Downloads 22
THE IMPACT OF CORPORATE GOVERNANCE VARIABLES ON NON-PERFORMING LOANS OF NIGERIAN DEPOSIT MONEY BANKS
The objective of the study was to examine the impact of Corporate Governance variables of Board size(BS), Board Composition(BC), Composition of Audit Committee(CAC) and power separation(PS) on Non-performing Loans of Nig...
FINANCIAL MARKET STRUCTURE AND ECONOMIC GROWTH: EVIDENCE FROM NIGERIA DATA
In this paper, we investigate both the long run and short run relationships between financial structure and economic growth using time series data. The presence of a unit root in the time series data was tested using Aug...
MODERATING EFFECT OF INTERNAL CONTROL SYSTEM ON THE RELATIONSHIP BETWEEN GOVERNMENT REVENUE AND EXPENDITURE
The study aims at examining the moderating effect of internal control system on the relationship between government revenue (statutory allocation and internally generated revenue) and expenditure. All the sixteen (16) lo...
CAUSALITY BETWEEN OIL CONSUMPTION AND ECONOMIC GROWTH IN OPEC COUNTRIES: A PANEL COINTEGRATION APPROACH
This paper examined the relationship between oil consumption and economic growth in OPEC countries within a panel cointegration and panel based error correction model by using data from 1980 – 2011. In this paper we use...
ISLAMIC CULTURE IMPACT OF INCREASING SATISFACTION AND PERFORMANCE OF EMPLOYEES: STUDY OF EDUCATIONAL INSTITUTIONS SABILLILAH SAMPANG
Many studies conducted by experts who want to know the direct relationship between organizational cultures with organizational performance, but there are also some empirical studies which found that organizational cultur...