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Corporate social responsibility and information asymmetry in the Korean market: Implications of chaebol affiliates

Title
Corporate social responsibility and information asymmetry in the Korean market: Implications of chaebol affiliates
Author
이정환
Keywords
Corporate Governance; Corporate Social Responsibility; ESG score; Information Asymmetry
Issue Date
2019-02
Publisher
Korea Distribution Science Association
Citation
The Journal of Asian Finance, Economics and Business, v. 6, NO 1, Page. 21-31
Abstract
This paper examines how corporate social responsibility is related to the degree of asymmetric information in the Korean financial market. Recent theory argues that there is a negative relationship between a firm’s corporate social responsibility and its information asymmetry. To test this hypothesis, we use the environment, social and governance (ESG) score, published by the Korean Corporate Governance Service, to proxy a firm’s management practices toward socially responsible activities. In the entire sample of the Korean firms, we find contrasting results; the ESG score shows negative relationships with the price impact measure but statistically insignificant relationships with the dispersion of analyst forecasts. However, the ESG score shows negative relationships with both measures when we exclude chaebol affiliates from the sample. These findings are robust when we examine environmental, social and corporate governance scores separately. This set of results argues for the extant theory, expecting a negative relationship between a firm’s engagement in corporate social responsibility and asymmetric information. It further argues for the importance of firm characteristics in determining the influence of socially responsible activities.
URI
http://jafeb.org/journal/article.php?code=65745http://repository.hanyang.ac.kr/handle/20.500.11754/107636
ISSN
2288-4637; 2288-4645
DOI
10.13106/jafeb.2019.vol6.no1.21
Appears in Collections:
COLLEGE OF ECONOMICS AND FINANCE[S](경제금융대학) > ECONOMICS & FINANCE(경제금융학부) > Articles
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