The Value of Corporate Social Responsibility: Evidence from the Humidifier Disinfectant Scandal in Korea

15 Pages Posted: 17 Jun 2023

See all articles by Kyunghyun Kim

Kyunghyun Kim

Korea University

Hyun Seung Na

Korea University Business School (KUBS)

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Abstract

As a quasi-natural experiment, we examine the effects of corporate social responsibility (CSR) on firms' stock performance amid a corporate scandal closely linked with environmental and social (ES) issues, the humidifier disinfectant scandal in Korea. We find that firms with higher ES ratings, especially those with higher social ratings, show significantly higher stock performance than firms with lower ES ratings during the product safety scandal. Our findings reveal that CSR is influential over a firm’s stock performance when investors pay significant attention to ES issues, suggesting that firms’ investments in CSR significantly mitigate their nonfinancial risk.

Keywords: Corporate Social Responsibility, Environmental and Social, Stock Performance, Humidifier Disinfectant Scandal

Suggested Citation

Kim, Kyunghyun and Na, Hyun Seung, The Value of Corporate Social Responsibility: Evidence from the Humidifier Disinfectant Scandal in Korea. Available at SSRN: https://ssrn.com/abstract=4482817 or http://dx.doi.org/10.2139/ssrn.4482817

Kyunghyun Kim

Korea University ( email )

Anam-ro, Seongbuk-Gu
Seoul, 02481

Hyun Seung Na (Contact Author)

Korea University Business School (KUBS) ( email )

Anam-Dong, Seongbuk-Gu
Seoul 136-701, 136701
Korea

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