ESG Performance of Multinational Companies and Stock Price Crash: Evidence from Korea

Jeong Hwan Lee (), Jin Hyung Cho () and Bong Joon Kim ()
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Jeong Hwan Lee: College of Economics and Finance, Hanyang University, Republic of Korea, Postal: College of Economics and Finance, Hanyang University
Jin Hyung Cho: College of Economics and Finance, Hanyang University, Republic of Korea, Postal: College of Economics and Finance, Hanyang University
Bong Joon Kim: College of Economics and Finance, Hanyang University, Republic of Korea, Postal: College of Economics and Finance, Hanyang University

Journal of Economic Integration, 2022, vol. 37, issue 3, 523-539

Abstract: Our research focuses on the relationship between the ESG performance of South Korean multinational companies and stock price crash in next year. For our study, we divide samples into three different categories - namely, all companies, multinational companies (MNC) and non-multinational companies(non-MNC). Our major findings are as following. First, we find the negative relationship between the social (S) score of multinational companies and future price crash, indicating that their social performance prevents price crash risk. Second, when individual ESG performance is considered, there exists negative relationship between environmental (E) and social (S) score, and future price crash for multinational companies. Lastly, we find negative relationship between the ESG score and future price crash, which is due to the high environmental (E) and social (S) score of MNCs, which, in turn, raise each respective score for all companies, which has high correlation with their ESG scores. In this research, focusing on features of ESG on price crash in Korean MNCs, we identify the mitigating effect of social (S) factor for the MNC, which is in consistence with previous researches.

Keywords: ESG; Multinational Companies; Korea; Stock Price Crash (search for similar items in EconPapers)
JEL-codes: F23 G32 M14 N25 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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