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

Author

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  • 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)

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.

Suggested Citation

  • Daeheon Choi & Chune Young Chung & Dongnyoung Kim & Chang Liu, 2019. "Corporate Environmental Responsibility and Firm Information Risk: Evidence from the Korean Market," Sustainability, MDPI, vol. 11(22), pages 1-9, November.
  • Handle: RePEc:gam:jsusta:v:11:y:2019:i:22:p:6518-:d:288581
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    1. Hail Jung & Seyeong Song & Chang-Keun Song, 2021. "Carbon Emission Regulation, Green Boards, and Corporate Environmental Responsibility," Sustainability, MDPI, vol. 13(8), pages 1-12, April.
    2. Yeuseung Kim, 2021. "Certified corporate social responsibility? The current state of certified and decertified B Corps," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1760-1768, November.
    3. Idiano D’Adamo & Pasquale Marcello Falcone & Michael Martin & Paolo Rosa, 2020. "A Sustainable Revolution: Let’s Go Sustainable to Get Our Globe Cleaner," Sustainability, MDPI, vol. 12(11), pages 1-5, May.

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