UNDERSTANDING HOW ESG ORIENTATION AND SUSTAINABILITY DISCLOSURE AFFECT INVESTOR DECISIONS THROUGH REPUTATION AND MARKET CONDITIONS

Abstract

The growing integration of sustainability considerations into corporate strategy has reshaped capital market dynamics, raising important questions about how responsible governance influences investor behavior. This study examines how sustainability oriented strategic posture and disclosure practices affect investor decision making through the mediating role of firm reputation and the moderating influence of market uncertainty. Drawing on signaling theory, the research proposes that sustainability related commitments function as credible signals that shape reputational evaluations and financial judgments. A quantitative cross-sectional design was employed, collecting survey data from senior managers in large textile manufacturing firms. Structural equation modeling using SmartPLS was applied to test direct, mediating, and moderating relationships. The findings reveal that sustainability orientation and disclosure significantly enhance firm reputation, which in turn positively influences investor decision making. Firm reputation mediates the relationships between sustainability practices and investment judgments. Moreover, market uncertainty strengthens the impact of reputation on investor decisions. The study highlights the central role of reputational capital in translating sustainability initiatives into tangible financial outcomes and contributes to a context sensitive understanding of signaling processes in sustainable finance.