Abstract
Newly listed firms can actively engage in corporate social responsibility (CSR) to build reputation, but they may postpone CSR until they have enough slack for it. Related to this, prior literature does not provide consistent results, the US evidence supports the latter while the Chinese results support the former. To extend the literature, we use Korean listed companies and examine the association between the listing period and CSR. We further investigate the effect of analyst following on the relationship. The empirical results show that firms with a shorter listing period invest more in CSR and that the association exists only in firm-years followed by analysts, indicating the importance of the information environment to inform CSR. We additionally find that young listed companies mainly use social contribution and soundness, which can be discretionarily conducted from a short-term perspective. The results of this study using CSR to obtain a short-term objective suggest that policymakers need to analyze a firm’s behavior from various perspectives and to establish proper guidelines to achieve a long-term goal of CSR “sustainability”.
Highlights
This study examines whether the listing period is associated with corporate social responsibility (CSR)
We investigated the relationship between the listing period and CSR using Korean listed firms
Considering the short-term focus of Korean CSR [3], we hypothesized that firms with a shorter listing period invest more in CSR and analyst following as an information environment affects the association
Summary
This study examines whether the listing period is associated with corporate social responsibility (CSR). Korea’s hasty culture can encourage young companies after initial public offering (IPO) to conduct CSR for short-term value increases Based on this possibility, we investigate whether the listing period affects CSR. Because CSR is desirable to pursue for long-term growth, it is important to understand which factors motivate firms to use CSR activities in the short term In this regard, our study suggests the possibility that the combination of the country characteristics and the reputation building incentive can induce firms to do short-term CSR activities. The results of newly listed companies using CSR for short-term performance indicate that they may hinder the achievement of the CSR’s long-term goal of “sustainability” Nations with these CSR characteristics need to consider this when establishing CSR policies.
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