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Exploring the Impacts of Financial Failure Risk on Sustainable Growth Policies: Evidence from the BIST Sustainability Index Companies

Author

Listed:
  • Fatih Güzyurdu
  • Serdar Yaman

Abstract

This study investigates the impacts of financial failure risk on firms' sustainable growth policies using econometric analysis and aims to identify suitable financial failure models for the sustainable growth policies developing process. The study covers data from 38 non-financial firms listed in the Borsa Istanbul Sustainability Index (XUSRD) for 2010-2022. Sustainable growth is calculated by Higgins's (1977) sustainable growth rate (HSGR), while financial failure risks are assessed through Altman's (1983) Z'-score, Springate (1978) S-score, Taffler (1983) T-score, Fulmer et al. (1984) H-score and Legault (1987) CA-score models. The econometric approach employs a five-stage panel data methodology, including the pre-tests of multi-collinearity, cross-sectional dependency, slope homogeneity, stationarity, autocorrelation, and heteroskedasticity. Panel regression results reveal positive relationships between financial success and sustainable growth. However, the statistical significance of these relationships varies across different financial failure models. The effects of T and H-scores are statistically significant, whereas Z', S, and CA-scores do not exhibit statistically significant effects. Consequently, the findings suggest that T and H-score models should be prioritized in sustainable growth policy development.

Suggested Citation

  • Fatih Güzyurdu & Serdar Yaman, 2024. "Exploring the Impacts of Financial Failure Risk on Sustainable Growth Policies: Evidence from the BIST Sustainability Index Companies," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 9(2), pages 230-253.
    • Handle: RePEc:ahs:journl:v:9:y:2024:i:2:p:230-253
    DOI: 10.30784/epfad.1431693
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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