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Journal of Economic Integration 2022 September;37(3) :523-539.
ESG Performance of Multinational Companies and Stock Price Crash: Evidence from Korea

Jeong Hwan LeeJin Hyung ChoBong Joon Kim 

College of Economics and Finance, Hanyang University, Republic of Korea
Corresponding Author: Jin Hyung Cho ,Email:
Copyright ©2022 Journal of Economic Integration
Our research focuses on the relationship between the ESG performance of South Korean multinational companies and stock price crash in next year. For our study, we divide samples into three different categories - namely, all companies, multinational companies (MNC) and non-multinational companies(non-MNC). Our major findings are as following. First, we find the negative relationship between the social (S) score of multinational companies and future price crash, indicating that their social performance prevents price crash risk. Second, when individual ESG performance is considered, there exists negative relationship between environmental (E) and social (S) score, and future price crash for multinational companies. Lastly, we find negative relationship between the ESG score and future price crash, which is due to the high environmental (E) and social (S) score of MNCs, which, in turn, raise each respective score for all companies, which has high correlation with their ESG scores. In this research, focusing on features of ESG on price crash in Korean MNCs, we identify the mitigating effect of social (S) factor for the MNC, which is in consistence with previous researches.

JEL Classification
F23: Multinational Firms; International Business
G32: Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
M14: Corporate Culture; Social Responsibility
N25: Asia including Middle East
Keywords: ESG | Multinational Companies | Korea | Stock Price Crash
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