Corporate Governance and Corporate Social Responsibility: Evidence from the Role of the Largest Institutional Blockholders in the Korean Market

Daeheon Choi, Paul Moon Sub Choi, Joung Hwa Choi and Chune Young Chung
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Daeheon Choi: College of Business Administration, Kookmin University, 77 Jeongneung-ro, Seongbuk-gu, Seoul 02707, Korea
Paul Moon Sub Choi: College of Business Administration, Ewha Womans University, 52 Ewhayeodae-gil, Seodaemun-gu, Seoul 03750, Korea
Joung Hwa Choi: Department of Business Management, The State University of New York, 119-2 Songdo Moonhwa-ro, Yeonsu-gu, Incheon 21985, Korea
Chune Young Chung: School of Business Administration, College of Business and Economics, Chung-Ang University, 84 Heukseok-ro, Dongjak-gu, Seoul 06974, Korea

Sustainability, 2020, vol. 12, issue 4, 1-15

Abstract: This study investigates the monitoring effectiveness of the largest institutional blockholder in Korea, the Korean National Pension Service (KNPS), on firms’ engagement in corporate social responsibility (CSR). We use a large, unique sample from Korea, where the financial market is primarily characterized by chaebols . We show that lagged KNPS blockholdings do not significantly influence investee firms’ concurrent CSR indexes. This result indicates that even the largest institutional blockholder in Korea does not actively engage in firms’ CSR initiatives to enhance their long-term performance and prosperity. Overall, our results suggest that institutional investors should more actively serve as an effective corporate governance mechanism in emerging Asian markets, where companies aim to be profitable and long-term corporate governance is very important.

Keywords: emerging Korean market; corporate governance; corporate social responsibility; institutional blockholder; institutional monitoring (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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