Investigation of the relationship between level of sustainability reporting and firm performance

This thesis aims to investigate the relationship between the level of sustainability reporting and firm performance. To achieve this aim, "What is the relationship between the level of sustainability reporting and firm performance?" the research question needs to be answered. A positivist research approach has been adopted to answer this research question. A secondary data was used for this study, the data was facilitated the Compustat database. The sample consists of data from 1,052 companies from 2 countries over 10 years (1 January 2009–31 December 2019), providing 52,560 observations. The effects of sustainability reporting disclosures (Environmental, Social and Governance), operational, financial and market performances on firm performance were examined. In addition to the independent variables, 3 control variables were included in the analysis, namely audit qualit and total assets on a firm basis, and gross domestic product on a country basis. Considering the type and number of variables used, the data were analyzed with the Multiple Regression Analysis method. The results of the analyzes show that while environmental disclosures have a significant effect on the operational performance of the firms, they have no effect on their financial and market performances. Social disclosures, on the other hand, have been observed to have a significant impact on operational, financial and market performances. It has been observed that corporate governance disclosures have a significant effect on operational, financial and market performances. Audit quality, total assets and gross domestic product included in the regression model as control variables have been observed to have a significant effect on operational performance This study contributes to the knowledge in the field of sustainability reporting and how ESG disclosures affect the performance of companies.