The Role of Environmental, Social, and Corporate Governance Activities in Cash Holding Policies: The Case of the BIST Sustainability Index

Yıl 2023, Sayı: 69, 45 - 56, 29.08.2023

Yusuf Güneysu

https://doi.org/10.26650/MED.1314375

Öz

Although firms are important in terms of economic development, they use energy to carry out their production activities and can thus cause environmental pollution. With the increase in environmental pollution, the level of societal awareness regarding the protection of nature has also increased. This situation imposes important responsibilities on firms in terms of ensuring environmental sustainability. Likewise, investors can consider non-financial information alongside financial information when making investment decisions. For this reason, environmental, social, and corporate governance (ESG) components are used for non-financial information disclosures. This study aims to analyze the effect the ESG performance of firms whose stocks are traded on the Borsa Istanbul (BIST) Sustainability Index has on cash holdings. In line with this, the study uses panel data analysis to estimate data for the period of 2015-2021. As a result, the study has determined both the overall ESG score as well as the scores of the individual ESG components to positively affect cash holdings. Moreover, financial leverage, market-to-book value ratio, and net working capital have been determined to positively impact and retained earnings to negatively impact cash holdings.

Anahtar Kelimeler

Cash Holdings, ESG Score, BIST Sustainability

Çevresel, Sosyal ve Kurumsal Yönetim Faaliyetlerinin Nakit Bulundurma Politikasındaki Rolü: BIST Sürdürülebilirlik Endeksi Örneği

Öz

Firmalar, ekonomik gelişme açısından önemli bir rol oynamakla birlikte üretim faaliyetlerini gerçekleştirmek için enerji kullanmakta ve çevre kirliliğine sebebiyet verebilmektedir. Çevre kirliliğinin artmasıyla birlikte toplumların doğanın korunması konusundaki bilinç düzeyi de artmaktadır. Bu durum çevresel sürdürülebilirliğin sağlanması noktasında firmalara önemli sorumluluklar yüklemektedir. Aynı şekilde yatırımcılar, yatırım kararı verirken finansal bilgiler ile birlikte finansal olmayan bilgileri de dikkate alabilmektedir. Bu nedenle finansal olmayan bilgi açıklamaları noktasında Çevresel, Sosyal ve Kurumsal Yönetim (ESG) bileşenleri kullanılmaktadır. Bu çalışma, hisse senetleri Borsa İstanbul (BIST) Sürdürülebilirlik Endeksi’nde işlem gören firmaların ESG performansının nakit bulundurma düzeyi üzerindeki etkisini analiz etmeyi amaçlamaktadır. Bu doğrultuda 2015-2021 dönemine ait veriler panel veri analizi kullanılarak tahmin edilmiştir. Çalışmanın sonucunda hem toplam ESG skorunun hem de ESG bileşenlerine ait skorların nakit bulundurma düzeyini pozitif yönde etkilediği saptanmıştır. Ayrıca nakit bulundurma düzeyi üzerinde finansal kaldıraç, piyasa değeri defter değeri oranı ve net çalışma sermayesinin pozitif, dağıtılmayan karların ise negatif bir etkisinin olduğu belirlenmiştir.

Anahtar Kelimeler

Nakit Bulundurma Düzeyi, ESG Skoru, BIST Sürdürülebilirlik

Kaynakça

• Abdi, Y., Li, X., & Câmara-Turull, X. (2022). Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: the moderating role of size and age. Environment, Development and Sustainability, 24(4), 50525079. https://doi.org/10.1007/s10668-021-01649-w google scholar
• AlHares, A., AlEmadi, N., Abu-Asi, T., & Al Abed, R. (2023). Environmental, social, and governance disclosure impact on cash holdings in OECD countries. Journal of Governance & Regulation, 12(2), 104-119. https://doi.org/10.22495/jgrv12i2art10 google scholar
• Atasel, O. Y., & Güneysu, Y. (2023). ESG performansı ile borç maliyeti arasındaki ilişki üzerine bir araştırma. Muhasebe ve Vergi Uygulamaları Dergisi, 16(2), 185-202. https://doi.org/10.29067/muvu.1196945 google scholar
• Atif, M., Liu, B., & Nadarajah, S. (2022). The effect of corporate environmental, social and governance disclosure on cash holdings: Life-cycle perspective. Business Strategy and the Environment, 31(5), 2193-2212. https://doi.org/10.1002/bse.3016 google scholar
• Baltagi, B. H., Jung, B. C., & Song, S. H. (2010). Testing for heteroskedasticity and serial correlation in a random effects panel data model. Journal ofEconometrics, 154(2), 122-124. https://doi.org/10.1016/j.jeconom.2009.04.009 google scholar
• Chen, Y., Li, T., Zeng, Q., & Zhu, B. (2023). Effect of ESG performance on the cost of equity capital: Evidence from China. International Review ofEconomics & Finance, 83, 348-364. https://doi.org/10.1016/j.iref.2022.09.001 google scholar
• Eliwa, Y., Aboud, A., & Saleh, A. (2021). ESG practices and the cost of debt: Evidence from EU countries. Critical Perspectives on Accounting, 79, 102097. https://doi.org/10.1016/j.cpa.2019.102097 google scholar
• Ferreira, M. A., & Vilela, A. S. (2004). Why do firms hold cash? Evidence from EMU countries. European financial management, 10(2), 295-319. https://doi.org/10.1111/j.1354-7798.2004.00251.x google scholar
• Güneysu, Y. ve Atasel, O. Y. (2022). Karbon emisyonları ile finansal performans arasındaki ilişkinin incelenmesi: BIST100 Endeksinde bir araştırma. Fırat Üniversitesi Sosyal Bilimler Dergisi, 32(3), 1183-1193. https://doi.org/10.18069/firatsbed.1125859 google scholar
• Habermann, F., & Fischer, F. B. (2023). Corporate social performance and the likelihood of bankruptcy: Evidence from a period of economic upswing. Journal ofBusiness Ethics, 182(1), 243-259. https://doi.org/10.1007/s10551-021-04956-4 google scholar
• Harper, J., & Sun, L. (2020). Environmental performance and corporate cash holdings. Applied Economics Letters, 27(15), 1234-1237. https://doi.org/10.1080/13504851.2019.1676381 google scholar
• Hendijani Zadeh, M., Magnan, M., Cormier, D., & Hammami, A. (2023). Does corporate social responsibility transparency mitigate corporate cash holdings?. International Journal ofManagerial Finance, 19(1), 63-87. https://doi.org/10.1108/IJMF-07-2021-0339 google scholar
• Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323-329. https://www.jstor.org/stable/1818789 google scholar
• Li, B., He, M., Gao, F., & Zeng, Y. (2021). The impact of air pollution on corporate cash holdings. Borsa Istanbul Review, 21, 90-98. https://doi.org/10.1016/j.bir.2021.04.007 google scholar
• Li, H., Zhang, X., & Zhao, Y. (2022). ESG and firm’s default risk. Finance Research Letters, 47, 102713. https://doi.org/10.1016/j. frl.2022.102713 google scholar
• Liao, J., Zheng, L., & Yuan, Y. (2023). The impact of corporate environmental responsibility on corporate cash holdings: evidence from the most polluting listed companies in China. Kybernetes, 52(1), 262-283. https://doi.org/10.1108/K-05-2021-0390 google scholar
• Liem, N. T. (2020). Social and environmental contributions, board size and cash holding: the case of energy firms. International Journal ofEnergy Economics and Policy, 10(4), 17-22. https://doi.org/10.32479/ijeep.9018 google scholar
• Limkriangkrai, M., Koh, S., & Durand, R. B. (2017). Environmental, social, and governance (ESG) profiles, stock returns, and financial policy: Australian evidence. International Review ofFinance, 17(3), 461-471. https://doi.org/10.1111/irfi.12101 google scholar
• Liu, B., Johl, S., & Lasantha, R. (2023). ESG scores and cash holdings: The role of disciplinary trading. Finance Research Letters, 103854. https://doi.org/10.1016/j.frl.2023.103854 google scholar
• Mohamad Ariff, A., Abd Majid, N., Kamarudin, K. A., Zainul Abidin, A. F., & Muhmad, S. N. (2023). Corporate ESG performance, Shariah-compliant status and cash holdings. Journal of Islamic Accounting and Business Research. https://doi.org/10.1108/ JIABR-08-2022-0217 google scholar
• Myers, S. C. (1984). Capital structure puzzle. Journal of Finance, 39 (3), 575-592. https://doi.org/10.2307/2327916 google scholar
• Nasr, S., Lakhal, N., & Saad, I. B. (2020). Corporate social responsibility and cash holdings: does board gender diversity matter?. International Journal ofBusiness Governance and Ethics, 14(3), 250-270. https://doi.org/10.1504/IJBGE.2020.108090 google scholar
• Opler, T., Pinkowitz, L., Stulz, R., & Williamson, R. (1999). The determinants and implications of corporate cash holdings. Journal of financial economics, 52(1), 3-46. https://doi.org/10.1016/S0304-405X(99)00003-3 google scholar
• Ozkan, A., & Ozkan, N. (2004). Corporate cash holdings: An empirical investigation of UK companies. Journal of banking & finance, 28(9), 2103-2134. https://doi.org/10.1016/j.jbankfin.2003.08.003 google scholar
• Rahman, H. U., Zahid, M., & Al-Faryan, M. A. S. (2023). ESG and firm performance: The rarely explored moderation of sustainability strategy and top management commitment. Journal of Cleaner Production, 404, 136859. https://doi.org/10.1016/j.jclepro.2023.136859 google scholar
• Sandberg, H., Alnoor, A., & Tiberius, V. (2023). Environmental, social, and governance ratings and financial performance: Evidence from the European food industry. Business Strategy and the Environment, 32(4), 2471-2489. https://doi.org/10.1002/bse.3259 google scholar
• Şeker, Y., & Güngör, N. (2022). Does ESG performance impact financial performance? Evidence from the utilities sector. Muhasebe Bilim Dünyası Dergisi, 24(MODAVICA Özel Sayısı), 160-183. https://doi.org/10.31460/mbdd.1065217 google scholar
• Tekin, H., & Burgazoglu, H. (2022). How Do Corporate Sustainability And Pandemic Affect Cash Holdings In Muslim Countries?. Journal ofIslamic Monetary Economics and Finance, 8(4), 615-636. https://doi.org/10.21098/jimf.v8i4.1649 google scholar
• UN-PRI. (2018). PRI Reporting Framework main definitions. Erişim adresi: https://www.unpri.org/Uploads/i/m/n/ maindefinitionstoprireportingframework_127272_949397.pdf google scholar
• Uyar, A., & Kuzey, C. (2014). Determinants of corporate cash holdings: evidence from the emerging market of Turkey. Applied Economics, 46(9), 1035-1048. https://doi.org/10.1080/00036846.2013.866203 google scholar
• Velte, P. (2017). Does ESG performance have an impact on financial performance? Evidence from Germany. Journal of Global Responsibility. 80(2), 169-178. https://doi.org/10.1108/JGR-11-2016-0029. google scholar
• Wang, J., & Liang, G. (2022). Regional Investment Preferences and Corporate Cash Holdings: Evidence from China. Sustainability, 14(23), 16007. https://doi.org/10.3390/su142316007 google scholar
• Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data. London: MIT press. google scholar
• Yang, A. S., & Susanto, G. C. (2021). Corporate social responsibility and cash holding: Evidence from trucking firms. Applied Economics Letters, 28(1), 85-89. https://doi.org/10.1080/13504851.2020.1733470 google scholar Yerdelen Tatoğlu, F. (2020). Panel veri ekonometrisi stata uygulamalı. 5. Baskı. Beta Basım Yayım Dağıtım A.Ş., İstanbul. google scholar
• Zhou, G., Liu, L., & Luo, S. (2022). Sustainable development, ESG performance and company market value: Mediating effect of financial performance. Business Strategy and the Environment, 31(7), 3371-3387. https://doi.org/10.1002/bse.3089 google scholar