An analysis of factors influencing the corporate sustainability performance of companies: A study on emerging markets and world sustainability index companies

This study aims to identify the factors influencing corporate sustainability performance and to analyze the differences between firms listed in emerging markets and in the world sustainability index. In today's business environment, the growing awareness of environmental, social, and governance issues necessitates evaluating companies not only based on their financial performance but also on their sustainability performance. In this context, the research comprehensively examines the effects of various factors such as corporate governance structures, financial indicators, and sectoral sensitivity on sustainability performance. The study analyzes data from companies listed in the Dow Jones Sustainability Index, specifically within the Emerging Markets and World Markets Index. Employing panel data analysis, the research covers the period from 2016 to 2022 and uses three primary sustainability indicators (environmental, social, and governance disclosure scores) as well as an overall sustainability disclosure score as dependent variables. Independent variables include corporate and financial characteristics such as board structure, proportion of female executives, audit committees, financial structure, market value, and profitability. This research provides a comparative examination of the institutional and financial determinants of sustainability disclosure in both emerging and world markets. It also investigates sectoral differences in disclosure behavior by accounting for environmental sensitivity (sensitive vs non-sensitive sectors). Based on the panel data analyses, disclosure scores for environmental, social, governance, and overall sustainability dimensions are assessed under four main categories. In terms of environmental disclosure scores, financial performance and governance-related variables such as CEO board membership, earnings per share, debt-to-equity ratio, and net profit are found to be significant in emerging markets. In global markets, structural and innovation-oriented factors such as number of employees, proportion of independent board members, and R&D intensity emerge as significant determinants. Sectoral analysis reveals that variables such as number of employees, EBITDA, leverage, and market value are commonly influential across both sector groups. Regarding social disclosure scores, the debt-to-equity ratio and earnings per share are significant across both market and sector groups, indicating a strong link between social disclosures and financial robustness. In emerging markets, governance mechanisms (e.g., corporate governance committee, audit structure) and R&D intensity impact social disclosures, while in sensitive sectors, the proportion of female executives and audit quality stand out. For governance disclosure scores, variables such as the proportion of independent board members, independence of the audit committee, auditor tenure, return on assets, and leverage are found to be significant across both markets and sector groups. This suggests a universal need for transparency and control in governance reporting. In contrast, overall sustainability disclosure scores are associated with a relatively limited number of factors. Auditor tenure, debt-to-equity ratio, and market value are identified as common determinants across both market types and sectoral sensitivities. The general findings of the study reveal that sustainability disclosures are influenced by a multidimensional set of factors, including a firm's financial structure, governance mechanisms, performance indicators, and innovation capacity. Additionally, the results indicate significant variations in disclosure practices depending on market maturity and sectoral sensitivity. These findings suggest that instead of adopting a one-size-fits-all approach, flexible and multi-layered policies that consider market and sector-specific characteristics should be implemented in sustainability reporting. The results provide practical insights for companies seeking to improve their sustainability performance by highlighting the relevant institutional and financial factors. Furthermore, the study contributes to the existing literature by offering a comparative and sectorally disaggregated analysis of the determinants of sustainability performance in both emerging and global market contexts. In conclusion, this thesis presents a comprehensive data-driven analysis to support the development of more effective corporate sustainability strategies and offers a foundation for sustainability-oriented regulations. Future studies are recommended to further explore sectoral depth and the temporal dimension in evaluating sustainability performance.