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A Conglomerate’s Effort for Co-Prospering with Its Subcontractors and Firm Value: Evidence from Korea

Seong-jin Choi (), Jong Kwon Ko () and Sukyoon Jung ()
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Seong-jin Choi: School of Business, Hanyang University, 222 Wangsimni-ro, Sageun-dong, Seongdong-gu, Seoul 04763, Korea
Jong Kwon Ko: School of Business, Hanyang University, 222 Wangsimni-ro, Sageun-dong, Seongdong-gu, Seoul 04763, Korea
Sukyoon Jung: School of Business, Hanyang University, 222 Wangsimni-ro, Sageun-dong, Seongdong-gu, Seoul 04763, Korea

Sustainability, 2018, vol. 10, issue 7, 1-15

Abstract: Shared growth effort, which is also known as mutual growth, has emerged as one of the most important keywords in Korean economy. This study examines whether a conglomerate’s shared growth effort evaluated by the Shared Growth Commission is valued by market investors. Using our full sample, we find that firms participating in shared growth evaluation have a higher firm value. The results from the full sample show that firm’s effort on shared growth is rewarded in the Korean capital market. However, after matching firms by size of sales and return on assets to better control for firm characteristics, we find that neither the participation nor a higher (lower) rating of the shared growth evaluation is associated with firm value. This implies that the result from the full sample may be capturing firm characteristics, instead of the effects of shared growth effort, thus market investors do not consider conglomerate’s shared growth effort as a value-enhancing strategy. Using a recently introduced shared-growth index, the findings in our study provide preliminary but important evidence on how creating shared value (CSV) is related to firm value.

Keywords: creating shared value; corporate social responsibility; firm value (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2018
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