Measuring the Financial Efficiencies of Banks Issuing Integrated Reports by Data Envelopment Analysis: The Case of Turkey

Abstract

Purpose – Businesses issue several different reports in addition to their financial reports. Diversity in the reports makes it difficult to analyze holistically. Also, a variety of reports is undesirable for inventors. Therefore, the integrated report is substantial for businesses and investors. In this phenomenon, this study aimed to measure the financial efficiencies of banks which publish integrated reports in Turkey between the years 2015-2020. Design/methodology/approach –Firstly, a research model was constituted with the obtained data from balance sheets and income statements of banks. After that, these were analyzed with financial ratio analysis, which is one of the most preferred financial performance indicators in the literature. Subsequently, the financial efficiency of banks was measured via the input-oriented data envelopment analysis (CCR Model-DEA). In this context, financial leverage, total debt/total equity ratios, and interest expense were used as input variables, return on asset (ROA), earning per share ratio, and interest income were used as output variables. Findings – According to findings, the integrated report does not have a direct and regular effect on the financial performance of banks in terms of examined years and banks. Because, certain banks were financially efficient before integrated reports, while some of them were not efficient after integrated reports. In addition, certain banks achieved financial efficiency after integrated reports, but in the following years, some of them failed to achieve financial efficiency. Discussion – The integrated report does not have a direct and regular effect on the financial performance of banks due to distinct economic and social reasons. Because financial efficiency is affected by several different factors at the micro and macro level. The fact that integrated report is a new reporting system also affects this situation.