Corporate Social Responsibility, Ownership Structure, and Firm Value: Evidence from Korea

Woo Kim,Sang Lee,Kunsu Park

doi:10.3390/su10072497

Abstract

This study examines the relationship between corporate social responsibility (CSR) and firm value in the context of ownership structure. Specifically, our study explores whether large shareholder and foreign shareholder ownership play an important role in the CSR–firm value relationship. Using a sample of 48 firms listed on the Korea Stock Exchange (KSE) between 2010 and 2014, we find that CSR is positively associated with firm value. We further find that the relationship between CSR and firm value is weaker in firms with high large shareholder ownership than in firms with low large shareholder ownership. However, we find no evidence of the effect of foreign ownership on the relationship between CSR and firm value. This study sheds light on the importance of ownership structure in the relationship between CSR and firm value, suggesting significant implications for academics, practitioners, and policymakers. We contribute to the existing literature by providing empirical evidence on the effect of ownership structure on the CSR–firm value relationship. Policymakers may consider these results in implementing their policies that can enhance CSR activities.

Highlights

Corporate social responsibility (CSR) has received a great deal of attention in recent years
More concerns are exhibited in the lack of understanding about the role of ownership structure in the relationship between corporate social responsibility (CSR) and firm value due to inconsistent results on its relationship in prior studies
One dimension to better understand these conflicting results is to analyze the association between CSR and firm value from the perspective of ownership structure

Summary

Introduction

Corporate social responsibility (CSR) has received a great deal of attention in recent years. New insights are reported on the impact of CSR initiatives for firms residing in China and in Asian markets where corporate governance structures are drastically different in the forms and compositions of those practiced in western countries. It will be an empirical issue whether CSR activities enhance the firm value for shareholders or if the activities pay too much attention to other stakeholders, decreasing shareholder value [6]

Objectives

Methods

Results

Conclusion