Sustainable Performance Drivers in Central and Eastern European IT Firms: A Multi-Theoretical and Empirical Analysis

This study investigates the determinants of financial and market-based sustainability among listed Information Technology (IT) firms in Central and Eastern Europe (CEE) between 2018 and 2024. Drawing on Agency Theory, Stakeholder Theory, Resource-Based View Theory, Dynamic Capabilities Theory and Legitimacy Theory, it examines how leverage, profitability, growth and earnings quality shape firm performance and valuation outcomes. Using a balanced panel of 266 firm-year observations from Poland, Romania, Hungary and Croatia, the analysis applies fixed-effects Ordinary Least Squares (OLS) regressions with heteroscedasticity-robust (HC3) standard errors. The results reveal that lower leverage significantly enhances return on equity, confirming agency-based governance effects, while revenue growth and earnings per share (EPS) are strong positive predictors of profitability. On the contrary, rapid growth increases Stock Price Volatility, reflecting a risk–return trade-off typical of emerging technology markets. Market valuation ratios (P/E) show weak sensitivity to fundamentals, suggesting that investor confidence in CEE IT firms remains partially institutionally constrained. Overall, the findings emphasise that sustainable performance in transitional economies depends more on internal capability deployment and governance discipline than on market perception, highlighting the maturity gap between operational excellence and valuation transparency in the regional IT sector.