Analyzing the Relationship Between Financial Failure and KPI Score: An Application in the SASB Transportation Sector

Companies can encounter financial difficulties while carrying out their activities due to economic fluctuations and crises. Financial methods have been developed for companies that want to avoid this situation. In addition to the financial reports companies publish forming the basis for identifying financial failure, environmental problems such as climate change and global warming have increased the demand for non-financial reports as well. Thus, sustainability reports are needed in addition to financial reports in order to determine a company’s ecological and environmentoriented problems. Companies use sustainability reports to announce their innovative and environmentalist approaches to stakeholders and related groups, and publishing sustainability reports is thought to allow companies to increase both their customer profiles as well as their reputation. The Sustainability Accounting Standards Board (SASB) acts as a framework with regard to how to convey to stakeholders issues related to sustainability accounting and reporting. SASB is an organization that operates to develop sustainability accounting standardsin 11 sectors and 77 industry branches. The currentstudy hasselected the transportation sector from among those in SASB and has identified sustainability measurement parameters in terms of key performance indicators (KPIs). In order to analyze the relationship between SASB’s KPI scores and the likelihood of financial failure, the study has chosen financial statements as the economic KPI indicator. During the implementation phase, the study reached out to 43 companies in the transportation sector and accessed data from 40 companies. However, one company was not taken into consideration due to having been founded in 2017; thus, the implementation is based on the remaining 39 companies’ five-year financial statements published between 2016-2020. The study also selected dependent and independent variables as indicators of companies’ financial failure and interpreted the results by applying logit and probit models.