Relationship Between Sustainability Report, Financial Performance, and Ownership Structure: Research on The Turkish Banking Sector

Abstract

The financial statements of companies have been evaluated in financial performance analysis for many years. However, today, investors and business stakeholders, who want to invest in businesses, demand not only the information presented in financial statements, but also non-financial information to see future status and test whether it have a sustainable structure. In this context, the reporting of information on the economic, social, and environmental dimensions of businesses is possible through sustainability reporting. The purpose of this study is to reveal the sustainability scores of banks operating in the Turkish Banking sector. Another aim of the study is to determine the relationship between the sustainability score of banks, financial performance indicators, and ownership structure. In the study, the compliance scores of banks along with a sustainability report determined the framework of criteria for sustainability reports standardized by the GRI. From 2013-2018, the data of 10 banks that published sustainability reports in the Turkish Banking Sector were analysed. According to the results obtained from the research, the sustainability score of banks was not effective based on their financial performance. On the other hand, an increase in the shares of the largest shareholder capital caused a decrease in the sustainability scores of banks.

The Impact of Sustainability Reporting on Financial Performance: Evidence from Turkish FBT and TCL Sectors

“…Based on the findings of Xu and Wang [35], this study also uses the logged value of EBITDA. The financial performance measures used in the paper are quite often used by scholars in similar studies [4,[28][29][30][31][32][33] and are defined as accounting-based measures derived from accounting calculations.…”

“…Do gan and Kevser [30], having studied the activities of 10 banks from the Turkish banking sector for 2013-2018, found that ESG indicators from their published sustainability reports do not affect their financial performance (ROA, ROE). Emir and Kıymık [31], after examining the role of GRI sustainability reports of BIST Metal Goods companies listed on the ISE for 2014-2018 in supporting their financial performance measures (ROA, ROE, ROC, profit before tax, growth rate in total assets), found a significant positive impact on the first four indicators and a significant negative impact on the growth rate in total assets.…”

Revealing the contribution of corporate sustainability practices to financial performance: Case of BIST Sustainability 25 Index companies

“…There was also a significant positive effect of leverage on ROA in the overall and subcategory models used, although no such effect was observed for the control variable size. Doğan and Kevser (2021) 2023) examined the impact of sustainability reports on financial performance measures (ROA and Tobin's Q) of 46 Turkish companies listed on the ISE for 2016-2020. They found a significant positive effect on ROA and its absence in relation to Tobin's Q.…”

Disclosure Compliance with Different ESG Reporting Guidelines: The Sustainability Ranking of Selected European and Hungarian Banks in the Socio-Economic Crisis Period

“…Based on the high level of recognition and a strong correlation with the NFRD and CSRD regulations, bank compliance with the GRI Standard is widely assessed in the literature; however, with scoring procedures using various methods (Smit and van Zyl 2016;Masud et al 2018;Do gan and Kevser 2021). Along with its general acceptance and the existence of bank-specific guidelines tailored for the thorough evaluation of members in the financial sector, the representation of scoring by GRI guidelines in the literature highly outnumbers that performed by the ACT and ISO guidelines.…”