Next Article in Journal
Facilitating Business Collaborations for Industrial Symbiosis: The Pilot Experience of the Sustainable Industrial Network Program in Colombia
Previous Article in Journal
The Relationship between POC Export Efficiency and Primary Production: Opposite on the Shelf and Basin of the Northern South China Sea
Article Menu

Export Article

Open AccessArticle
Sustainability 2018, 10(10), 3635; https://doi.org/10.3390/su10103635

Does ESG Performance Enhance Firm Value? Evidence from Korea

1
Division of Economics and Information Statistics, Kangwon National University, Chuncheon 24341, Korea
2
College of Economics and Finance, Hanyang University, Seoul 04763, Korea
3
Department of Economics, Indiana University Bloomington, Bloomington, IN 47405, USA
*
Author to whom correspondence should be addressed.
Received: 5 September 2018 / Revised: 6 October 2018 / Accepted: 6 October 2018 / Published: 11 October 2018
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
Full-Text   |   PDF [442 KB, uploaded 11 October 2018]

Abstract

We analyze whether a firm’s corporate social responsibility (CSR) plays a significant role in promoting its market value in an emerging market, namely Korea. We employ environmental, social, and corporate governance (ESG) scores to evaluate CSR performances and examine their effect on firm valuation. We find that CSR practices positively and significantly affect a firm’s market, in line with previous studies on developed countries. However, its impact on share prices can differ according to firm characteristics. For firms in environmentally sensitive industries, the value-creating effect of CSR is lesser than for firms that do not belong to sensitive industries. Specifically, corporate governance practice negatively influences the firm value of environmentally sensitive firms. Further, governance practice significantly promotes market value only for chaebols, while investors do not significantly value governance practice carried out by other firms. This finding suggests the value-enhancing effects of governance structure reformation in the former. This work mainly contributes to the literature by verifying a positive CSR-valuation relationship in emerging markets, which provides substantial policy and welfare implications in markets where governments play a major role in promoting CSR. A stronger valuation effect of CSR in chaebols may present economic background for the intervention of the Korean government in the reformation of chaebol. View Full-Text
Keywords: ESG; firm value; corporate social responsibility; sustainable development; Korea; environmentally sensitive industries; family-managed business groups; corporate governance ESG; firm value; corporate social responsibility; sustainable development; Korea; environmentally sensitive industries; family-managed business groups; corporate governance
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
SciFeed

Share & Cite This Article

MDPI and ACS Style

Yoon, B.; Lee, J.H.; Byun, R. Does ESG Performance Enhance Firm Value? Evidence from Korea. Sustainability 2018, 10, 3635.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Sustainability EISSN 2071-1050 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top