SavedAdd your journal

Journals / Ekonomi Politika ve Finans Araştırmaları Dergisi / 2023 / Cilt: 8 Sayı: 2

The Effect of ESG Sustainability on Firm Performance: A View under Size and Age on BIST Bank Index Firms

ESG Sürdürülebilirliğinin Firma Performansına Etkisi: BİST Banka Endeksinde Büyüklük ve Yaşa Bağlı Bir İnceleme

Turhan Korkmaz(MERSİN ÜNİVERSİTESİ)0000-0001-5468-2279
Tuğba Nur(ŞIRNAK ÜNİVERSİTESİ)0000-0002-0974-4896
Pages
208–223
Publication Date
2023-07-02
🏛️Bibliographic metadata and full text access for this article are provided via DergiPark.
DergiPark Record ↗
✨

AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

In addition, while it was confirmed that firm age has a statistically significant and positive moderating effect in the relationship between ESG scores and firm performance, it was found that firm size does not have a significant moderating effect.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:The goal of this study is to examine the relationship between environmental, social and governance (ESG) scores and firm performance and whether firm size and age moderating role in this relationship.
📊
Key Findings & Data:The period of the study was determined as 2013-2021 and the sample is comprised of banks listed in the BIST Bank Index.
💡
Conclusion & Impact:In addition, while it was confirmed that firm age has a statistically significant and positive moderating effect in the relationship between ESG scores and firm performance, it was found that firm size does not have a significant moderating effect.
🔬Design:Research Article
📍Scope:2013-2021 Verileri
⚙️Variables:ESG · Sürdürülebilirlik · Firma Performansı

Abstract

The goal of this study is to examine the relationship between environmental, social and governance (ESG) scores and firm performance and whether firm size and age moderating role in this relationship. The period of the study was determined as 2013-2021 and the sample is comprised of banks listed in the BIST Bank Index. The panel data analysis found a statistically significant and positive correlation between ESG scores and firm performance and a statistically significant and negative correlation between firm age and size and firm performance. In addition, while it was confirmed that firm age has a statistically significant and positive moderating effect in the relationship between ESG scores and firm performance, it was found that firm size does not have a significant moderating effect. Therefore, it is safe to say for the relevant period and sample that increased efforts of firms in environment, social responsibility, and proper governance have a positive influence on financial performance.

Özet

Çalışmada çevresel, sosyal ve kurumsal yönetişim (ESG) skorları ile firma performansı ilişkisi ve bu ilişkide firma büyüklüğü ve firma yaşının moderatör rolünün olup olmadığının araştırılması amaçlanmıştır. Çalışmanın dönemi 2013-2021 olarak belirlenmiş olup, çalışmanın örneklemini BİST Banka Endeksi’nde faaliyet gösteren bankalar oluşturmaktadır. Geçekleştirilen panel veri analizi sonucunda ESG skorları ile firma performansı arasında istatistiksel olarak anlamlı ve pozitif yönlü ilişki, firma yaşı ve büyüklüğün ile firma performansı arasında ise istatistiksel olarak anlamlı ve negatif yönlü ilişki olduğu tespit edilmiştir. Ayrıca ESG skorları ile firma performansı ilişkisinde firma yaşının istatistiksel olarak anlamlı ve pozitif yönlü moderatör etkisi olduğu doğrulanırken, firma büyüklüğünün anlamlı bir moderatör etkisinin olmadığı görülmüştür. Dolayısıyla ilgili dönem ve örneklemde firmaların çevre ve sosyal sorumluluk ve uygun yönetişim gibi faktörler üzerinde çabalarının artmalarının finansal performansa olumlu yönde yansıdığını söylemek mümkündür.

🔖

Cite This Article

Korkmaz, T., Nur, T., *, T. N. (2023). The Effect of ESG Sustainability on Firm Performance: A View under Size and Age on BIST Bank Index Firms. Ekonomi Politika ve Finans Araştırmaları Dergisi, Cilt: 8 Sayı: 2, 208–223. https://doi.org/10.30784/epfad.1278491

📄 Full Text PDF Viewer

📄

PDF görüntüleyici hazırlanıyor...

References (34)

  1. Abdi, Y., Li, X. and Càmara-Turull, X. (2022). Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: The moderating role of size and age. Environment, Development and Sustainability, 24(4), 5052-5079. https://doi.org/10.1007/s10668-021-01649-w
  2. Akyildirim, E., Coskun, A., Celik, I. and Ozdemir Hol, A. (2022). The impact of environmental, social, and governance (ESG) news on financial performance of firms: Evidence from Borsa Istanbul. Ankara Haci Bayram Veli University Journal of the Faculty of Economics and Administrative Sciences, 24(2), 598-621. https://doi.org/10.26745/ahbvuibfd.1090499
  3. Al Hawaj, A.Y. and Buallay, A.M. (2022). A worldwide sectorial analysis of sustainability reporting and its impact on firm performance. Journal of Sustainable Finance & Investment, 12(1), 62-86. https://doi.org/10.1080/20430795.2021.1903792
  4. Alareeni, B.A. and Hamdan, A. (2020). ESG impact on performance of US S&P 500-listed firms. Corporate Governance: The International Journal of Business in Society, 20(7), 1409-1428. https://doi.org/10.1108/CG-06-2020-0258
  5. Albitar, K., Hussainey, K., Kolade, N. and Gerged, A.M. (2020). ESG disclosure and firm performance before and after IR: The moderating role of governance mechanisms. International Journal of Accounting & Information Management, 28(3), 429-444. https://doi.org/10.1108/IJAIM-09-2019-0108
  6. Atan, R., Alam, M.M., Said, J. and Zamri, M. (2018). The impacts of environmental, social, and governance factors on firm performance: Panel study of Malaysian companies. Management of Environmental Quality: An International Journal, 29(2), 182-194. https://doi.org/10.1108/MEQ-03-2017-0033
  7. Atan, R., Razali, F., Said, Said, J. and Zainun, S. (2016). Environmental, social and governance (ESG) disclosure and its effect on firm’s performance: A comparative study. International Journal of Economics and Management, 10(2), 355-375. Retrieved from http://www.econ.upm.edu.my/ijem
  8. Aydogmus, M., Gulay, G. and Ergun, K. (2022). Impact of ESG performance on firm value and profitability. Borsa Istanbul Review, 22(2), 119-129. https://doi.org/10.1016/j.bir.2022.11.006
  9. Azmi, W., Hassan, M.K., Houston, R. and Karim, M.S. (2021). ESG activities and banking performance: International evidence from emerging economies. Journal of International Financial Markets, Institutions and Money, 70, 101277. https://doi.org/10.1016/j.intfin.2020.101277
  10. Bahadori, N., Kaymak, T. and Seraj, M. (2021). Environmental, social, and governance factors in emerging markets: The impact on firm performance. Business Strategy & Development, 4(4), 411-422. https://doi.org/10.1002/bsd2.167
  11. Baltagi, B. and Li, Q. (1991). A joint test for serial correlation and random individual effects. Statistics and Probability Letters, 11, 277-280. https://doi.org/10.1016/0167-7152(91)90156-L
  12. Baltagi, B.H. (2005). Econometric analysis of panel data. England: John Wiley & Sons, Ltd.
  13. Breusch, T.S. and Pagan, A.R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The Review of Economic Studies, 47(1), 239-253. https://doi.org/10.2307/2297111
  14. Buallay, A. (2019). Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality: An International Journal, 30(1), 98-115. https://doi.org/10.1108/MEQ-12-2017-0149
  15. Cetenak, E.H., Ersoy, E. and Isik, O. (2022). The effect of ESG (environmental, social and governance) scores on firm performance: Evidence from Turkish banking industry. Erciyes University Journal of Faculty of Economics and Administrative Sciences, 63, 75-82. https://doi.org/10.18070/erciyesiibd.1212587
  16. Cho, Y. (2022). ESG and firm performance: Focusing on the environmental strategy. Sustainability, 14(13), 7857. https://doi.org/10.3390/su14137857
  17. Di Tommaso, C. and Thornton, J. (2020). Do ESG scores effect bank risk taking and value? Evidence from European banks. Corporate Social Responsibility and Environmental Management, 27(5), 2286-2298. https://doi.org/10.1002/csr.1964
  18. Ersoy, E., Swiecka, B., Grima, S., Özen, E. and Romanova, I. (2022). The impact of ESG scores on bank market value? Evidence from the US banking industry. Sustainability, 14(15), 1-14. https://doi.org/10.3390/su14159527
  19. Honda, Y. (1985). Testing the error components model with non-normal disturbances. Review of Economic Studies, 52, 681-690. https://doi.org/10.2307/2297739
  20. Kim, B. and Lee, S. (2020). The impact of material and immaterial sustainability on firm performance: The moderating role of franchising strategy. Tourism Management, 77, 103999. https://doi.org/10.1016/j.tourman.2019.103999
  21. Kulali, G. (2022). Impacts of environmental, social and governance (ESG) performance on market value: The role of firm size. Eskişehir Osmangazi University Journal of Economics and Administrative Sciences, 17(3), 787-809. https://doi.org/10.17153/oguiibf.1098419
  22. Mohammad, W.M.W. and Wasiuzzaman, S. (2021). Environmental, Social and Governance (ESG) disclosure, competitive advantage and performance of firms in Malaysia. Cleaner Environmental Systems, 2, 100015. https://doi.org/10.1016/j.cesys.2021.100015
  23. Nguyen, D.T., Hoang, T.G. and Tran, H.G. (2022). Help or hurt? The impact of ESG on firm performance in S&P 500 non-financial firms. Australasian Accounting, Business and Finance Journal, 16(2), 91-102. https://doi.org.10.14453/aabfj.v16i2.7
  24. Pesaran, M.H. (2007). A simple panel unit root test in the presence of cross-section dependence. Journal of Applied Econometrics, 22(2), 265-312. https://doi.org/10.1002/jae.951
  25. Pesaran, M.H. and Yamagata, T. (2008). Testing slope homogeneity in large panels. Journal of Econometrics, 142(1), 50-93. https://doi.org/10.1016/j.jeconom.2007.05.010
  26. Pesaran, M.H. (2004). General diagnostic tests for cross section dependence in panels (Cambridge Working Paper in Economics No. 0435). https://doi.org/10.17863/CAM.5113
  27. Pesaran, M.H., Ullah, A. and Yamagata, T. (2008). A bias‐adjusted LM test of error cross‐section independence. The Econometrics Journal, 11(1), 105-127. https://doi.org/10.1111/j.1368-423X.2007.00227.x
  28. Pulino, S.C., Ciaburri, M., Magnanelli, B.S. and Nasta, L. (2022). Does ESG disclosure influence firm performance? Sustainability, 14(13), 1-18. https://doi.org/10.3390/su14137595
  29. Ruan, L. and Liu, H. (2021). Environmental, social, governance activities and firm performance: Evidence from China. Sustainability, 13(2), 767. https://doi.org/10.3390/su13020767
  30. Sisman, M.E. and Cankaya, S. (2021). The effect of environmental, social and corporate governance (ESG) data on the financial performance of firms: A study on the airline industry. Journal of Cukurova University Faculty of Economics and Administrative Sciences, 25(1), 73-91. https://doi.org/10.51945/cuiibfd.880468
  31. Ting, I.W.K., Azizan, N.A., Bhaskaran, R.K. and Sukumaran, S.K. (2019). Corporate social performance and firm performance: Comparative study among developed and emerging market firms. Sustainability, 12(1), 26. https://doi.org/10.3390/su12010026
  32. Velte, P. (2017). Does ESG performance have an impact on financial performance? Evidence from Germany. Journal of Global Responsibility, 80(2), 169-178. https://doi.org/10.1108/JGR-11-2016-0029
  33. Yoon, S. and Chun, D. (2022). The effect of ESG on management efficiency: Focusing on the moderating effect of the firm size. Korean Management Review, 51(5), 1221-1241. Retrieved from https://www.dbpia.co.kr/
  34. Zahid, R.A., Khan, M.K., Anwar, W. and Maqsood, U.S. (2022). The role of audit quality in the ESG-corporate financial performance nexus: Empirical evidence from Western European companies. Borsa Istanbul Review, 22(2), 200-212. https://doi.org/10.1016/j.bir.2022.08.011