Sustainability performance, investor valuation, and financial performance: An exogenous shock analysis from Türkiye

This study investigates the multifaceted relationship between corporate sustainability performance (CSP), investor valuation, and accounting-based financial performance within the context of the Turkish market. The methodology employed in this study involves using univariate and multivariate methods to test the hypothesized relationships. The sample includes data from 365 publicly traded firms from March 2016 to September 2021. Building on the resource-based view and stakeholder theory, the research posits a positive relationship between CSP and accounting-based CFP, emphasizing value creation through cost reduction and stakeholder motivation. The findings reveal an intricate relationship, indicating that while high CSP aligns with improved financial performance indicators, such as return on assets and earnings per share, investors exhibit a degree of skepticism, manifested in lower quarterly stock returns in the pre-pandemic period. Moreover, the study introduces a dimension by exploring the impact of the COVID-19 pandemic as a notable transformation in investor perception. During the pandemic, investors valued high CSP firms with a premium, signaling a potential shift from a short-term profit maximization focus to a stakeholder-oriented approach.