The Impact of Sustainability Performance on Financial Performance: Does Firm Size Matter? Evidence from Turkey and South Korea

Meltem Kılıç, Hasan Emin Gurler, Ahmet Kaya and Chang Won Lee ()
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Meltem Kılıç: Faculty of Economics and Administration Sciences, Kahramanmaras Sutcu Imam University, Kahramanmaras 46050, Turkey
Hasan Emin Gurler: Faculty of Applied Sciences, Akdeniz University, Antalya 07070, Turkey
Ahmet Kaya: Faculty of Applied Sciences, Akdeniz University, Antalya 07070, Turkey
Chang Won Lee: School of Business, Hanyang University, Seoul 04763, Republic of Korea

Sustainability, 2022, vol. 14, issue 24, 1-19

Abstract: This study investigated the effect of sustainability performance on financial performance in developed and developing countries. It also aimed to determine the moderator effect of firm size. The factor for sustainability performance was listed in the BIST Sustainability Index for Turkey and the Dow Jones Sustainability Korea Index for South Korea. ROE, ROA, ROS, and MV/BV were used as financial performance factors. Companies included in the KOSPI 100 index for South Korea and the BIST 100 index for Turkey were examined. Panel regression analysis and Generalized Method of Moments (GMM) analysis were performed to determine the effect of the past value of financial performance factors on their current value. The results show that the impact of sustainability performance on financial performance differs between South Korea and Turkey. In addition, the moderator variable has a significant effect only on ROA (return on assets) for Turkey and on ROE (return on equity) and ROS (return on sales) for South Korea. The results of the GMM analysis show that the past ROA and ROE values affect the current values statistically and positively for South Korea. For Turkey, the past ROE, ROS, and MV/BV (Market Value/Book Value) positively affect the current values. In addition to theoretical implications, implications for policy-makers and practitioners are also presented. Finally, this study provides significant insights for decision-makers and policy-makers to improve sustainability and corporate responsibility in financial and other similar settings.

Keywords: sustainability performance; financial performance; BIST sustainability index; Dow Jones Sustainability Korea Index; firm size (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:24:p:16695-:d:1002064

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