Corporate Sustainability Management, Earnings Transparency, and Chaebols

Hyun Min Oh, Sam Bock Park and Hee Young Ma
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Hyun Min Oh: Department of Accounting, College of Social Sciences, Sunchon University, 255 Jungang-ro, Suncheon 57922, Korea
Sam Bock Park: Department of Accounting, College of Commerce, Jeonbuk National University, 567 Baekje-daero, Deokjin-gu, Jeonju 54896, Korea
Hee Young Ma: Shinwha Accounting Corporation, 15 Teheran-ro 86-gil, Gangnam-gu, Seoul 06179, Korea

Sustainability, 2020, vol. 12, issue 10, 1-19

Abstract: This study examines the association of corporate sustainability management with earnings transparency. Based on previous studies that indicate that sustainability management activities reduce earnings management and corporate risk and increase a firm’s value, this study predicts that the firms with effective sustainability management will have a high earnings transparency. In addition, this study examines the differential effect of corporate sustainability management on earnings transparency according to whether or not a firm belongs to a chaebol. We use Environmental, Social, and Governance (ESG) ratings of the Korean Corporate Governance Service (KCGS) as a proxy for corporate sustainability management and apply the method of Cheng and Subramanyam (2008) to measure earnings transparency. The empirical results show that there is a significant positive relationship between corporate sustainability management and earnings transparency. Furthermore, the association between corporate sustainability management and earnings transparency is more negative for firms belonging to a chaebol. These results indirectly show that firms belonging to a chaebol have a lower level of information asymmetry than firms not belonging to a chaebol. This study focuses on corporate sustainability management as a determinant of earnings transparency, and is useful for examining the effect of belonging to a chaebol on the relationship between sustainability management and earnings transparency. Our results are expected to provide important implications not only for managers, but also for investors and regulators.

Keywords: corporate sustainability management; corporate social responsibility; earnings transparency; chaebol (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:10:p:4222-:d:361194

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