Effect of digital transformation on financial performance: A research on BIST manufacturing industrial enterprises

The main aim of this study is to investigate the relationship of digital transformation of businesses operating in the manufacturing industry with financial performance indicators. In the study, the annual reports and year-end financial statements of the businesses were used to analyze the relationship between the digital transformation and financial performance indicators of 84 manufacturing sector businesses whose shares are traded on the BIST. Data for the 11-year period, from the year the Industry 4.0 approach, which was introduced at the Hannover Fair in Germany in 2011, emerged until 2021, was collected and secondary data were used in the research. The independent variable used in the study is the level of digital transformation of businesses. In order to reveal the level of digital transformation, the annual reports of the businesses were analyzed using the text frequency method through the MAXQDA 2022 program. In order to determine the digital transformation levels through the text data in the annual reports, the keywords related to digital transformation were determined, and the digital transformation levels of the busineseses were determined according to the word frequencies. In the study, accounting-based performance indicators return on assets (ROA) and return on equity (ROE), which are determinants of financial performance, and market-based performance indicator PD/DD ratio were used as dependent variables. Firm age, firm size and stock market registration year of businesses were also included in the study as control variables. In addition, it has been analyzed whether the digital transformation roadmap for the manufacturing sector creates a difference between the period before and after the period when it is announced as the national transformation policy, and whether there is a difference in terms of digital transformation between the manufacturing sector businesses whose technology levels are determined as low technology level and high technology level. Correlation analysis was used to determine whether there was a positive and/or negative relationship between the independent variable and the dependent variables. In the study, it was concluded that there is a relationship between the level of digital transformation of manufacturing businesses and financial performance indicators.