The Relationship of Corporate Strategic and Sustainability Variables with Corporate Governance Policies and Financial Performance

INTRODUCTION

The rapid growth of corporate sustainability reporting and the reform of reporting frameworks represent an important strategi c and cultural shift in the business world. According to company registry data, an increasing number of business entities are using independent sustainability reports to communicate their sustainability commitments and social initiatives. In response to the demand for credible reporting, companies are also seeking sustainability assurance. Related research has demonstrated the decision-making usefulness of sustainability information and clarified the implications of sustainability reporting from the perspective of reporting entities or capital providers (Chu et al., 2020). Auditors, as an important contractual stakeholder, have been found to use this type of secondary information when making decisions. Since corporate sustainability reflects the financial and non-financial risks of the company, sustainability reporting is likely to influence auditors’ perceptions and judgments (Hickman et al., 2020). Voluntary sustainability reporting demonstrates the environmental, social and governance commitments of reporting companies and informs the effectiveness of their sustainability strategies. In addition, it provides investors, financial analysts, asset managers and rating agencies with valuable information that can be integrated into their investment strategies and decisions. Implementing corporate sustainability responsibility at a societal level, the initiative aims to promote a more stable and resilient financial system and, while there is no mandatory requirement for professional organizations to adopt the primary rate interface, the number of signatories has increased from just over 100 in 2006 to over 2,701 in 2020, representing over $80 trillion in assets. Key aspects of the initiative include responsible and sustainable decision-making, but in particular, disclosing environmental, social and governance considerations in ownership policies and practices and ensuring that all signatories and members of the initiative work together to increase their effectiveness in implementing the six governing principles. But this is not possible only through the market and the financial system, responsible investors who feel empowered to support and invest in institutions that address environmental, social and governance issues strengthen and expand their core business, leading to the pursuit of long-term value and meaningful impact by responsible investors. There is also evidence that the reputational benefits of environmental innovation and sustainable corporate responsibility performance can increase the market value of the company and also bring operational benefits to financial performance.

The present study examines the relationship between strategic and sustainability variables of the company with corporate governance policies and financial performance.

 MATERIALS AND METHODS

This study is applied research in terms of nature and descriptive method and in terms of purpose, and since in the present study the current state of the variables has been analyzed using data collection through past information, it is included in the category of descriptive and post-event studies. In the course of this research, six main hypotheses were formulated and 122 companies were selected through systematic elimination sampling for a 7-year period between 1396 and 1402 as the next year, and the data related to the research variables were analyzed after collection in Excel software using Eviews statistical software version 10.