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Corporate Sustainability Management, Earnings Transparency, and Chaebols

1
Department of Accounting, College of Social Sciences, Sunchon University, 255 Jungang-ro, Suncheon 57922, Korea
2
Department of Accounting, College of Commerce, Jeonbuk National University, 567 Baekje-daero, Deokjin-gu, Jeonju 54896, Korea
3
Shinwha Accounting Corporation, 15 Teheran-ro 86-gil, Gangnam-gu, Seoul 06179, Korea
*
Authors to whom correspondence should be addressed.
Sustainability 2020, 12(10), 4222; https://doi.org/10.3390/su12104222
Received: 23 April 2020 / Revised: 15 May 2020 / Accepted: 20 May 2020 / Published: 21 May 2020
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
This study examines the association of corporate sustainability management with earnings transparency. Based on previous studies that indicate that sustainability management activities reduce earnings management and corporate risk and increase a firm’s value, this study predicts that the firms with effective sustainability management will have a high earnings transparency. In addition, this study examines the differential effect of corporate sustainability management on earnings transparency according to whether or not a firm belongs to a chaebol. We use Environmental, Social, and Governance (ESG) ratings of the Korean Corporate Governance Service (KCGS) as a proxy for corporate sustainability management and apply the method of Cheng and Subramanyam (2008) to measure earnings transparency. The empirical results show that there is a significant positive relationship between corporate sustainability management and earnings transparency. Furthermore, the association between corporate sustainability management and earnings transparency is more negative for firms belonging to a chaebol. These results indirectly show that firms belonging to a chaebol have a lower level of information asymmetry than firms not belonging to a chaebol. This study focuses on corporate sustainability management as a determinant of earnings transparency, and is useful for examining the effect of belonging to a chaebol on the relationship between sustainability management and earnings transparency. Our results are expected to provide important implications not only for managers, but also for investors and regulators. View Full-Text
Keywords: corporate sustainability management; corporate social responsibility; earnings transparency; chaebol corporate sustainability management; corporate social responsibility; earnings transparency; chaebol
MDPI and ACS Style

Oh, H.M.; Park, S.B.; Ma, H.Y. Corporate Sustainability Management, Earnings Transparency, and Chaebols. Sustainability 2020, 12, 4222.

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