Abstract
This research explored ESG rating changes after stock price crashes and the impact of foreign investor ownership and investment horizons. Using regression analysis and data from Korean listed firms from 2012 to 2020, we observed an improvement in ESG ratings following stock price crashes. However, higher foreign ownership did not necessarily lead to higher ESG ratings in crashed firms, except for those with long-horizon foreign ownership. The results were consistent when considering crash causes and robust in sensitivity analyses. The research sheds light on factors influencing ESG ratings and emphasizes the significance of stock price crashes and foreign investor ownership in promoting corporate sustainability.
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