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, Chune Young Chung

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

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.

Original languageEnglish
Article number1680
JournalSustainability (Switzerland)
Volume12
Issue number4
DOIs
StatePublished - 1 Feb 2020

Keywords

  • Corporate governance
  • Corporate social responsibility
  • Emerging Korean market
  • Institutional blockholder
  • Institutional monitoring

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