IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i6p2368-d1356082.html
   My bibliography  Save this article

The Relationship between the Greenhouse Gas and Energy Target Management System and Foreign Ownership: Investor Sensitivity to the Implementation of the System

Author

Listed:
  • Eunsoo Kim

    (College of Business, Sangmyung University, Seoul 03016, Republic of Korea)

Abstract

As the issue of climate change intensifies, the international community has been actively formulating strategies for mitigation and adaptation. With developed countries leading the way in enforcing stricter greenhouse gas emission regulations, the risks and opportunities associated with climate change have become critical factors in both domestic and international competitive markets. This study examines the investment preferences of foreign investors in companies managed under the Greenhouse Gas and Energy Target Management System (TMS) from 2010 to 2022. Furthermore, it delves into the sensitivity of these investors to the extent of each company’s adherence to the TMS, analyzing this responsiveness in terms of information asymmetry and corporate life cycle. Utilizing a sample of 19,826 firm-year observations from companies listed on the Korea Composite Stock Price Index (KOSPI) and the Korea Securities Dealers Automated Quotations (KOSDAQ) markets, this study’s regression analysis reveals several key findings. Firstly, foreign investors show a preference for investing in companies managed under the TMS compared to those not involved in this system. Secondly, high information asymmetry in the context of TMS implementation negatively impacts foreign investors’ preferences. Thirdly, among TMS-managed companies, foreign investors tend to favor those in the maturity stage of their life cycle. These results suggest that foreign investors perceive the systematic implementation of carbon reduction targets under a government-led TMS as an indicator of a company’s environmental management efficiency, influencing their investment decisions.

Suggested Citation

  • Eunsoo Kim, 2024. "The Relationship between the Greenhouse Gas and Energy Target Management System and Foreign Ownership: Investor Sensitivity to the Implementation of the System," Sustainability, MDPI, vol. 16(6), pages 1-17, March.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:6:p:2368-:d:1356082
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/6/2368/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/6/2368/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Larelle Chapple & Peter M. Clarkson & Daniel L. Gold, 2013. "The Cost of Carbon: Capital Market Effects of the Proposed Emission Trading Scheme ( ETS )," Abacus, Accounting Foundation, University of Sydney, vol. 49(1), pages 1-33, March.
    2. Chika Saka & Tomoki Oshika, 2014. "Disclosure effects, carbon emissions and corporate value," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 5(1), pages 22-45, February.
    3. Patricia M. Dechow & Richard G. Sloan & Amy P. Sweeney, 1996. "Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC," Contemporary Accounting Research, John Wiley & Sons, vol. 13(1), pages 1-36, March.
    4. Amir Barnea & Amir Rubin, 2010. "Corporate Social Responsibility as a Conflict Between Shareholders," Journal of Business Ethics, Springer, vol. 97(1), pages 71-86, November.
    5. Kothari, S.P. & Leone, Andrew J. & Wasley, Charles E., 2005. "Performance matched discretionary accrual measures," Journal of Accounting and Economics, Elsevier, vol. 39(1), pages 163-197, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Desmond Bayong & Bernard Bawuah & Elizabeth Amoah, 2025. "Advancing environmental, social, and governance disclosure in emerging economies: does regulatory environment and ownership structure matter?," SN Business & Economics, Springer, vol. 5(1), pages 1-45, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Roger C.Y. Chen & Shih‐Wei Hung, 2021. "Exploring the impact of corporate social responsibility on real earning management and discretionary accruals," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(1), pages 333-351, January.
    2. Hanish Rajpal & Pawan Jain, 2018. "Auditor’s Characteristics and Earnings Management in India," Accounting and Finance Research, Sciedu Press, vol. 7(4), pages 1-43, November.
    3. Samuel Jebaraj Benjamin, 2019. "The Effect of Financial Constraints on Audit Fees," Capital Markets Review, Malaysian Finance Association, vol. 27(2), pages 59-87.
    4. Moon Kyung Cho & Minjung Kang, 2024. "Executives Implicated in Financial Reporting Fraud and Firms’ Investment Decisions," Sustainability, MDPI, vol. 16(11), pages 1-26, June.
    5. Bhuiyan, Md. Borhan Uddin & Rahman, Asheq & Sultana, Nigar, 2020. "Female tainted directors, financial reporting quality and audit fees," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(2).
    6. repec:spt:apfiba:v::y:2018:i::f:8_2_2 is not listed on IDEAS
    7. Jincheol Bae & Jaehong Lee & Eunsoo Kim, 2019. "Does Fixed Asset Revaluation Build Trust between Management and Investors?," Sustainability, MDPI, vol. 11(13), pages 1-22, July.
    8. Badolato, Patrick G. & Donelson, Dain C. & Ege, Matthew, 2014. "Audit committee financial expertise and earnings management: The role of status," Journal of Accounting and Economics, Elsevier, vol. 58(2), pages 208-230.
    9. Marc Berninger, 2024. "Changes in the Perception of Error Announcements from the German Two-Tier Enforcement," Schmalenbach Journal of Business Research, Springer, vol. 76(4), pages 613-639, December.
    10. Cheng, Che-Hui & Wu, Po-Chin, 2013. "Nonlinear earnings persistence," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 156-168.
    11. Mao, Yaping & Renneboog, Luc, 2015. "Do managers manipulate earnings prior to management buyouts?," Journal of Corporate Finance, Elsevier, vol. 35(C), pages 43-61.
    12. Nagar, Neerav & Sen, Kaustav, 2016. "Earnings Management Strategies during Financial Distress," IIMA Working Papers WP2016-02-03, Indian Institute of Management Ahmedabad, Research and Publication Department.
    13. Chahine, Salim & Fang, Yiwei & Hasan, Iftekhar & Mazboudi, Mohamad, 2019. "Entrenchment through corporate social responsibility: Evidence from CEO network centrality," International Review of Financial Analysis, Elsevier, vol. 66(C).
    14. Stockmans, Annelies & Lybaert, Nadine & Voordeckers, Wim, 2013. "The conditional nature of board characteristics in constraining earnings management in private family firms," Journal of Family Business Strategy, Elsevier, vol. 4(2), pages 84-92.
    15. Meiying Hua & Pervaiz Alam, 2021. "Audit Quality and Environment, Social, and Governance Risks," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 12(2), pages 50-75, April.
    16. He, Feng & Du, Hanyu & Yu, Bo, 2022. "Corporate ESG performance and manager misconduct: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 82(C).
    17. Ramzi Benkraiem & Maria Qureshi & Asif Saeed & Constantin Zopounidis, 2024. "Corporate social responsibility, carbon footprints and stock market valuation," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 33(3), pages 213-237, August.
    18. Mingzi Song & Naoto Oshiro & Akinobu Shuto, 2016. "Predicting Accounting Fraud: Evidence from Japan," The Japanese Accounting Review, Research Institute for Economics & Business Administration, Kobe University, vol. 6, pages 17-63, December.
    19. Rasmi Meqbel & Mohammad Alta'any & Salah Kayed & Ahmed Al‐Omush, 2024. "Earnings management and sustainability assurance: The moderating role of CSR committee," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1769-1785, May.
    20. Demirtas, K. Ozgur & Rodgers Cornaggia, Kimberly, 2013. "Initial credit ratings and earnings management," Review of Financial Economics, Elsevier, vol. 22(4), pages 135-145.
    21. Constantina Backinezos & Stelios Panagiotou & Evangelia Vourvachaki, 2020. "Multiplier effects by sector: an input-output analysis of the Greek economy," Economic Bulletin, Bank of Greece, issue 52, pages 7-28, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:6:p:2368-:d:1356082. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.