The Impact of ESG Management on Investment Decision: Institutional Investors’ Perceptions of Country-Specific ESG Criteria

So Ra Park and Jae Young Jang
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So Ra Park: Department of Tourism Management, Cheju Halla University, Jeju-si 63092, Korea
Jae Young Jang: Department of International Business and Accountancy, Cheju Halla University, Jeju-si 63092, Korea

IJFS, 2021, vol. 9, issue 3, 1-27

Abstract: Existing global ESG models are limited in terms of applicability and predictability, especially in countries with an unstable environment. On the other hand, utilizing internally made or privately sourced ESG models have caused issues relating to generalizability, comparability, and continuity. In our research, we present an ESG framework that is specific to South Korea, which has both global and country-specific factors in all three categories. The AHP model is used to determine how the three categories’ materiality would be viewed by institutional investors as well as how country-specific factors rank against global factors. The results of this study show that institutional investors place more importance on environmental and governance factors compared to social factors. Factors including shareholders’ rights, pollution and waste, greenhouse gas emissions, and risk and opportunity management are found to have greater influences on investors’ investment decisions. In addition, it was confirmed that both of the country-specific variables for South Korea, partnership with subcontractor and CEO reputation, have a significant influence on investment decisions. By having the ESG model validated by institutional investors, who are the main users of ESG disclosures of corporations, our methodology of presenting a country-specific model can be benchmarked by studies on other emerging markets with a variety of country-level specificities.

Keywords: ESG management; ESG investment; Korean specific ESG model; partnership with subcontractor; CEO reputation; institutional investor; analytical hierarchy process (AHP) (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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