ESG and Firm Performance in Korea: The Moderating Role of CEO Tenure, Ownership Structure, and Foreign Ownership

Sunteak Lee, Sung-Jun Lee and Joongwha Kim ()
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Sunteak Lee: A&D Korea, Seoul 07331, Republic of Korea
Sung-Jun Lee: HUFS Business School, Hankuk University of Foreign Studies (Seoul Campus), Seoul 02450, Republic of Korea
Joongwha Kim: HUFS Business School, Hankuk University of Foreign Studies (Seoul Campus), Seoul 02450, Republic of Korea

Sustainability, 2025, vol. 17, issue 19, 1-19

Abstract: Environmental, Social, and Governance (ESG) management has global relevance, yet its effects differ across contexts. In Korea, with concentrated ownership, family-controlled conglomerates, and evolving governance norms, the ESG–firm performance link offers unique insights. This study examines 620 publicly listed firms in Korea over the 2020–2022 period to assess the effects of ESG performance on firm value (Tobin’s q) and financial performance (operating return on assets). Three governance-related variables that reflect the distinctive features of Korea’s corporate governance—CEO (chief executive officer) tenure, the shareholding ratio of the largest shareholder, and foreign ownership ratio—are included in the analysis as moderating variables. Results show that ESG performance positively affects both firm value and financial performance. Also, CEO tenure and foreign ownership significantly strengthen the ESG–firm value relationship, whereas the shareholding ratio of the largest shareholder enhances the ESG–financial performance link. These findings extend stakeholder, legitimacy, and institutional theories to an East Asian context and offer practical guidance for managers and policymakers aiming to enhance corporate outcomes through ESG strategies in Korea’s distinctive governance environment.

Keywords: ESG; firm value; corporate governance in Korea; CEO tenure; ownership concentration; foreign ownership; chaebol (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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