DOES CORPORATE SUSTAINABILITY PRACTICES HAVE AN IMPACT ON FINANCIAL PERFORMANCE: A STUDY BASED ON BIST MANUFACTURING FIRMS

Yıl 2018, Cilt: 8 Sayı: 1, 9 - 13, 30.12.2018

Nevzat Gungor , Ceren Dincel

https://doi.org/10.17261/Pressacademia.2018.971

Öz

Purpose- Corporate Sustainability notion has become very important in recent years with sustainable development, which is defined as fulfillment of current needs without risking fulfillment of future generations' needs. Especially in the last two decades, the relationship between financial performance and corporate sustainability has been questioned extensively in large masses particularly business and academic world. The purpose of this study is to analyze the corporate sustainability practices and its impact on financial performance.

Methodology - It focuses on relationship between corporate sustainability practices and financial performance. In order to reach this aim corporate sustainability checklist is established and companies are classified according to their sustainability levels. Publicly traded companies from BIST 100 (excluding finance sector) are used as a sample. Data is gathered from theirs annual reports for the years between 2012-2017.

Findings- MANOVA analysis is used to analyze the relationship between the sustainability levels and the financial performance indicators. The results implied that sustainability levels have statistically significant effect between the group means of 3 variables. These are Current Ratio, Gross Profit Margin and Corporate Governance Index. For Current Ratio variable, there is a significant difference between sustainable and least sustainable category for 10 % significance level. For CG Index variable, there is a significant difference between most sustainable and sustainable category and most sustainable and least sustainable category for 5 % significance level. For Gross Profit Margin variable, there is a significant difference between most sustainable and sustainable category for 5 % significance level.

Conclusion- In many studies it is found that there is a positive relationship between corporate social sustainability and firm financial performance. Our study supports that companies incorporate sustainability issues into their business operations are better able to leverage their resources toward stronger financial performance and shareholder value creation.We were able find a significant relationship between Current Ratio, Gross Profit Margin and Corporate Governance Index. The paper contributes to the literature by offering a more holistic approach to corporate sustainable performance measurement and its relationship between financial performance.

Anahtar Kelimeler

Sustainable development, corporate sustainability, financial performance, Borsa Istanbul

Kaynakça

• Ameer, R., Othman, R. (2012). Sustainability practices and corporate financial performance: a study based on the top global corporations. Journal of Business Ethics, vol. 108, no. 1, p. 61-79.
• Aras, G., Aybars, A., Kutlu, O. (2010). Managing corporate performance: Investigating the relationship between corporate social responsibility and financial performance in emerging markets. International Journal of Productivity and Performance Management, vol. 59, no. 3, p. 229-254.
• Charlo, M.J., Moya, I., Munoz, A.M. (2015). Sustainable development and corporate financial performance: a study based on the FTSE4Good IBEX index. Business Strategy and the Environment, vol. 24, p. 277-288.
• Chen, L., Feldmann, A., Tang, O. (2015). The relationship between disclosures of corporate social performance and financial performance: Evidences from GRI reports in manufacturing industry. International Journal of Production Economics, vol. 170, p. 445-456.
• Cheng, S., Lin, K.,Z., Wong W. (2016). Corporate social responsibility reporting and firm performance: Evidence from China. Journal of Management and Governance, vol. 20, no. 3, p. 503-23.
• Collison, D.J., Cobb, G., Power, D.M., Stevenson, L.A. (2008). The financial performance of the FTSE4Good indices. Corporate Social Responsibility and Environmental Management, vol. 15, no. 1, p. 14-28.
• Cunha, F.A.F.S., Samanez C.P. (2013). Performance analysis of sustainable investments in the Brazilian stock market: a study about the corporate sustainability index (ISE). Journal of Business Ethics, vol. 117, no. 1 p. 19-36.
• DiSegni, D.M., Huly, M., Akron, S. (2015). Corporate social responsibility, environmental leadership and financial performance. Social Responsibility Journal, vol. 11, no. 1, p. 131-148.
• Eccles, R.G., Ioannou I., Serafeim, G. (2014) The impact of corporate sustainability on organizational processes and performance. Management Science, vol. 60, no. 11, p. 2381-2617.
• Gomez-Bezares, F., Przychodzen, W., Przychodzen, J. (2017). Bridging the gap: How sustainable development can help companies create shareholder value and improve financial performance. Business Ethics: A European Review, vol. 26, no. 1, p. 1-17.
• Goyal, P., Rahman, Z., Kazmi, A.A. (2013). Corporate sustainability performance and firm performance research: Literature review and future research agenda. Management Decision, vol. 51 no.2, p. 361-379.
• Oikonomou, I., Brooks, C., Pavelin, S. (2012). The impact of corporate social performance on financial risk and utility: a longitudinal analysis financial management. Financial Management, vol. 41, no. 2, p. 483-515.
• Rodriguez-Fernandez, M. (2016). Social responsibility and financial performance: the role of good corporate governance. Business Research Quarterly, vol. 19, no. 2, p. 137-151.
• Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P., Saaeidi, S.A (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, vol. 68, no. 2, p. 341-350.
• Skare, M., Golja, T. (2012). Corporate social responsibility and corporate financial performance – Is there a link? Economic Research-Ekonomska Istraživanja, vol. 25, p. 215-242.
• Tang, Z., Hull, C.E., Rothenberg, S. (2012). How corporate social responsibility engagement strategy moderates the CSR–financial performance relationship. Journal of Management Studies, vol. 49, no. 7, p. 1274-1303.
• Testa, M., D’Amato, A. (2017). Corporate environmental responsibility and financial performance: Does bidirectional causality work? Empirical evidence from the manufacturing industry. Social Responsibility Journal, vol. 13, no. 2, p. 221–234.
• Vitezic, N. (2011). Correlation between social responsibility and efficient performance in Croatian enterprises. Zb. rad. Ekon. fak. Rij., vol. 29, no. 2, p. 423-442.
• Wagner, M. (2010). The role of corporate sustainability performance for economic performance: a firm-level analysis of moderation effects. Ecological Economics, vol. 69, no. 7, p.1553-1560.