Corporate Environmental Responsibility and Firm Information Risk: Evidence from the Korean Market

Daeheon Choi, Chune Young Chung, Dongnyoung Kim and Chang Liu
Additional contact information
Daeheon Choi: College of Business Administration, Kookmin University, 77 Jeongneung-ro, Seongbuk-gu, Seoul 02707, Korea
Chune Young Chung: School of Business Administration, College of Business and Economics, Chung-Ang University, 84 Heukseok-ro, Dongjak-gu, Seoul 06974, Korea
Dongnyoung Kim: College of Business Administration, California State University San Marcos, 333 S. Twin Oaks Valley Rd., San Marcos, CA 92096, USA
Chang Liu: College of Business Administration, California State University, Sacramento, 6000 J Street, Sacramento, CA 95819, USA

Sustainability, 2019, vol. 11, issue 22, 1-9

Abstract: Despite the potential benefits of a firm’s corporate environmental commitment to its information environment, few empirical studies examine the relationship between corporate environmental responsibility (CER) and firm information risk in emerging markets. In such markets, better corporate transparency and less information asymmetry are becoming increasingly important owing to firms’ poor governance structures, the lack of protection for investors, the substantial participation of unsophisticated individual investors, and so on. Using a comprehensive sample of firms engaged in CER for the period from 2005 to 2016, we find that a firm’s CER score has a negative effect on measures of firm information risk in the emerging Korean market, which is characterized by poor corporate governance and a strong influence of owner–managers. Furthermore, our results show that the negative relationship between CER and information risk is more pronounced for firms with higher uncertainty (lower transparency). Thus, we conclude that CER enhances a firm’s information environment by reducing investors’ information risk.

Keywords: corporate environmental responsibility; information risk; earnings quality; chaebol; corporate governance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.mdpi.com/2071-1050/11/22/6518/pdf (application/pdf)
https://www.mdpi.com/2071-1050/11/22/6518/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:11:y:2019:i:22:p:6518-:d:288581

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().