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

13 Pages Posted: 6 Nov 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, outperform firms with lower ES ratings during the product safety scandal. Our findings reveal that ES performance is influential over a firm’s stock returns when investors pay high attention to CSR, suggesting that firms’ CSR investments 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=4624609 or http://dx.doi.org/10.2139/ssrn.4624609

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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