The Effect of Listing Period on Corporate Social Responsibility: Evidence from Korea

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This study investigates whether related party transactions (RPTs) are associated with corporate social responsibility (CSR). Analyzing Korean public companies, we find that firms with more RPTs show poor CSR performance, especially in terms of soundness and fairness. The results are only maintained in firms with low ownership of controlling shareholders, supporting the conflict-of-interest view related to RPTs. Furthermore, we find that RPTs of firms held low by controlling shareholders do not contribute to firm value. Our results indicate that the expropriation of profits or resources through RPTs negatively affects the CSR decision of affiliations, which acts as a deterrence to long-term growth. In emerging markets where RPTs within a business group are prevalent, a government needs to restrict RPTs which are beneficial only for controlling shareholders and to encourage CSR activities of affiliations with low controlling ownership.

Section: Related Party Transactions (Rpts) and Corporate Social Respo...supporting

confidence: 87%

Section: Proxy Of Csr Measurementioning

confidence: 99%

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Related Party Transactions and Corporate Social Responsibility: Evidence from Korea

Kim

Jung

2022

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“…The institution evaluates firms' CSR performance based on six items: soundness, fairness, social contribution, consumer protection, environmental management, and employee satisfaction. The maximum score of the KEJI index is 100 [58]. Table 3 describes the six items of the KEJI index.…”

Section: Sample Selectionmentioning

confidence: 99%

Corporate Social Responsibility and Sustainable Employability: Empirical Evidence from Korea

Rhee

Woo

et al. 2021

A firm’s corporate social responsibility (CSR) aids in social well-being, but it is costly. It is thus necessary to study whether a firm’s CSR activities are valuable in terms of costs and benefits for shareholders’ interest. Recent studies reported that firms’ CSR activities help to develop the corporate environment and improve financial performance. In addition, prior studies explained that a firm’s CSR activities can have a positive effect on financial performance by increasing employees’ commitment to their firm. The purpose of this study research is to examine the effect of CSR activities on sustainable employability through empirical analysis. We measured the sustainable employability using the percentage of regular employees and then examined the effect of CSR activities on sustainable employability using 3802 firm-year data for Korean listed firms. From the empirical results, we found that firms engaging in CSR activities improve more in terms of sustainable employability than do firms who are not engaging in CSR activities. We also found that the companies engaging in a high CSR index score showed greater sustainable employability than did those with a low CSR index score. The results of this study suggested a way to increase sustainability in terms of employment by supporting a rational basis for companies to adopt CSR. These findings are expected to contribute to academia and the capital market by providing empirical evidence that a company’s CSR activities have a positive impact on sustainable employability.

“…Given that high values of PMDA indicate low financial reporting quality, the result supports that that firms with high CSP are ethical on average. Secondly, we tested whether high CSP contributes to firm value (Tobin's q) based on prior research [43] and show the result in Table 6. As shown in Table 6, the coefficient of CSP is 0.025, significant at the level of 1% (t-statistics value = 3.98).…”

Section: The Association Between Csp and Audit Hours (Hypothesis 1)mentioning

confidence: 99%

The Effect of Corporate Social Performance on Audit Hours: Moderating Role of the Emphasis of Matter Paragraphs in Audit Report

Kim

Jung

2020

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This study investigated the effect of corporate social performance (CSP) on audit hours and whether the emphasis of matter (EOM) paragraphs in audit report moderates the association between CSP and audit hours. Auditors input audit hours based on the judgement of audit risk related to firm and managerial characteristics. They increase audit hours when they perceive that client companies are riskier; thus, audit hours reflect auditors' perceptions of the firm. Prior studies have shown that high CSP is associated with ethical managers, leading to fewer audit hours. However, auditors' perceptions of CSP can be different depending on their knowledge about firms' potential risks. EOM paragraphs consists of risk-related factors, such as going-concern opinions or litigation and they should be considered when auditors determine that users need to check this information acquired in the auditing process. Therefore, EOM is likely to affect auditors' perceptions of CSP. This study investigates this possibility by examining whether the associations between CSP and audit hours are different in firms with and without EOM paragraphs in audit reports. Using Korean listed companies from 2011 to 2016, we found that CSP has a negative association with audit hours, suggesting that better CSP is related to ethical corporate social responsibility (CSR) in Korea, consistently with the literature. However, CSP is not related to audit hours for firms with EOM paragraphs, possibly indicating that auditors differently interpret CSP based on their knowledge gained in the auditing process. Our findings contribute to the literature by suggesting that EOM paragraphs can be used in distinguishing firms' CSR motivations and that information users should be careful in interpreting CSP.