An Empirical Study on Acquisition, Resale and Retirement of Treasury Stocks: Based on The Corporate Governance Characteristics and ESG Performance

Abstract

This study presents the results of an empirical analysis of companies listed on the Korean domestic stock market from 2013 to 2021, following the 2011 revision of the Commercial Code. This study investigates how a company's governance structure and ESG activities affect the repurchase, resale, and retirement of treasury stock, and how such actions impact the company's market valuation. The empirical analysis shows that various corporate governance variables, including ownership structure, influence treasury stock-related actions. The impact on company value varies, depending upon the level of corporate governance variables. A company's ESG activities primarily have a positive impact on the repurchase and retirement of treasury stock. Furthermore, our study reveals that when companies with relatively low ESG evaluation ratings repurchase and retire treasury stocks, their value increases. However, the resale of treasury stock had a negative impact on company value for both the high and low ESG evaluation rating groups.