Analysis of the relationship between the SASB-KPI score of companies and the probability of financial failures

Companies have had to face the financial distress brought by the COVID-19 pandemic today in addition to the global financial crises such as the Great Depression in the early 1900s and the Subprime Mortgage crisis in the 2000s. Various financial failure prediction methods have been developed to predict and combat these financial distress in a timely and effective manner.The issue of companies' ability to overcome financial distress, in other words, to return to a successful position, has become the focus. Financial reports are taken as a key in determining the financial status of companies. However, the occurrence of unpredictable changes in environmental quality in the biosphere showed the need for non-financial reports. For this purpose, it is aimed to measure the relationship between sustainability reports and financial failure in this study. In the first part of the study, the concept of sustainability and its background, sustainability accounting, sustainability report and key performance indicators, which are sustainability parameters, are explained. In the second part of the study, the organizations related to sustainability accounting; Sustainability Accounting Standards Board (SASB), Global Reporting Initiative (GRI), International Integrated Reporting Council (IIRC), Carbon Disclosure Project (CDP), Climate-Related Financial Statements Task Force (TCFD) organizations were announced. In the third part of the study, financial failure is defined, financial failure estimation studies, reasons and costs of financial failure are explained. In the fourth part of the study, multivariate models and modern estimation methods are explained. In the fifth part of the study, the application was made and it consists of two stages. In the first stage, the transportation sector was selected in the Sustainability Accounting Standards Board (SASB) and the Z′′ score developed by Altman and Hotchkiss (2006) was calculated. In the second stage, financial statements were chosen as the economic key performance indicator in the transportation sector selected in SASB. Then, dependent and independent variables, which are the financial failure criteria of the companies, were selected.Logit and probit methods, which are among the financial failure estimation methods, were applied. Keywords: Sustainability Accounting, Financial Failure, Key Performance Indicators (KPI), Sustainability Report, Sustainability Accounting Standards Board, Logistics Regression