Nexus between Sustainability Reporting and Firm Performance: Considering Industry Groups, Accounting, and Market Measures

Banu Dincer, Ayşe İrem Keskin and Caner Dincer ()
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Banu Dincer: Department of Business Administration, Faculty of Economic and Administrative Sciences, Galatasaray University, Çıragan Cad. No: 36, Ortaköy, Istanbul 34349, Turkey
Ayşe İrem Keskin: Department of Business Administration, Faculty of Economics, Administrative and Social Sciences, Kadir Has University, Cibali Mah. Fatih, Istanbul 34083, Turkey
Caner Dincer: Department of Business Administration, Faculty of Economic and Administrative Sciences, Galatasaray University, Çıragan Cad. No: 36, Ortaköy, Istanbul 34349, Turkey

Sustainability, 2023, vol. 15, issue 7, 1-13

Abstract: The relationship between Sustainability Reporting and corporate financial performance is overlapping and multifaceted and it has been an interesting issue for both academics and professionals since the beginning of the millennium. Studies have found divergent results on this relation and the industrial differences are omitted in many papers. Moreover, studies considering developing countries are scarce. The purpose of this study is to shed light on the relationship between sustainability reporting and firm performance in a developing country context. The impact of sustainability reporting is investigated using pooled ordinary least square (OLS) method for panel data regression through two models based on Tobin’s Q and ROA. A total of 920 observations for 46 companies with 3 different impact levels based on their environmental effect and 5-year quarterly panel data between 2016–2020. The research used data from Borsa Istanbul (Istanbul Stock Exchange) and also independent variables such as leverage, risk, size, current ratio, growth, sustainability reporting, and the environmental impact level of companies. The results showed that sustainability reporting has a significant positive impact on financial performance according to the ROA model, and a significant negative correlation between risk and financial performance according to both ROA and Tobin’s Q models. Considering the environmental impact of companies, the results also reveal a positive relationship between high impact companies’ sustainability reporting and short-term financial performance as ROA is an accounting-oriented measure that reveals the company’s short-term financial performance. Further research should investigate the impact of sustainability reporting in different markets based on the impact level of companies and the development degree of countries.

Keywords: sustainability reporting; financial performance; Tobin’s Q; ROA; sustainability impact (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:15:y:2023:i:7:p:5849-:d:1109276

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