The effect of firm performance on the readability of sustainability reports: The case of borsa İstanbul

Sustainability, the importance of which has increased day by day for companies in recent years, is an inevitable goal in all fields of activity of companies. For this reason, the corporate reporting process, which started with the sharing of financial information, has evolved into the preparation of sustainability reports with the addition of non-financial information. Through sustainability reports, companies provide information about their economic, environmental and social performances to the company environment. Readability values can be used when measuring the quality of the reports. Readability is briefly expressed as the level of understanding of texts. The readability of the sustainability statements provides information about the communication between the stakeholders and the company. Depending on their performance, companies interfere with the readability of the information shared in the reports. Good performance can lead to more readable reports, while poor performance can lead to reduced readability of the reports. This study aims to empirically examine the relationship between readability and company performance by measuring the readability of sustainability reports. In the study, 162 firm/year data between 2007 and 2020 of 20 companies that prepare sustainability reports and are traded in Borsa Istanbul were used. According to the results of the analysis, the readability values obtained with the Ateşman Readability Index show that the readability of sustainability reports is generally in the "Difficult" and "Very Difficult" categories. In addition, there is a statistically significant relationship between return on assets, return on equity, net profit margin and readability values.