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A Conglomerate’s Effort for Co-Prospering with Its Subcontractors and Firm Value: Evidence from Korea

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  • Seong-jin Choi

    (School of Business, Hanyang University, 222 Wangsimni-ro, Sageun-dong, Seongdong-gu, Seoul 04763, Korea)

  • Jong Kwon Ko

    (School of Business, Hanyang University, 222 Wangsimni-ro, Sageun-dong, Seongdong-gu, Seoul 04763, Korea)

  • Sukyoon Jung

    (School of Business, Hanyang University, 222 Wangsimni-ro, Sageun-dong, Seongdong-gu, Seoul 04763, Korea)

Abstract

Shared growth effort, which is also known as mutual growth, has emerged as one of the most important keywords in Korean economy. This study examines whether a conglomerate’s shared growth effort evaluated by the Shared Growth Commission is valued by market investors. Using our full sample, we find that firms participating in shared growth evaluation have a higher firm value. The results from the full sample show that firm’s effort on shared growth is rewarded in the Korean capital market. However, after matching firms by size of sales and return on assets to better control for firm characteristics, we find that neither the participation nor a higher (lower) rating of the shared growth evaluation is associated with firm value. This implies that the result from the full sample may be capturing firm characteristics, instead of the effects of shared growth effort, thus market investors do not consider conglomerate’s shared growth effort as a value-enhancing strategy. Using a recently introduced shared-growth index, the findings in our study provide preliminary but important evidence on how creating shared value (CSV) is related to firm value.

Suggested Citation

  • Seong-jin Choi & Jong Kwon Ko & Sukyoon Jung, 2018. "A Conglomerate’s Effort for Co-Prospering with Its Subcontractors and Firm Value: Evidence from Korea," Sustainability, MDPI, vol. 10(7), pages 1-15, July.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:7:p:2512-:d:158599
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    References listed on IDEAS

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    Cited by:

    1. Manuel Ángel Fernández‐Gámez & A. Manuel Gutiérrez‐Ruiz & Rafael Becerra‐Vicario & Daniel Ruiz‐Palomo, 2020. "The impact of creating shared value on hotels online reputation," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2201-2211, September.
    2. repec:thr:techub:10010:y:2020:i:1:p:291-298 is not listed on IDEAS
    3. Rafael Becerra-Vicario & Ana Leon-Gomez & Antonio Manuel Gutierrez-Ruiz & Manuel Angel Fernandez-Gamez, 2020. "Sustainable development through Corporative Social Responsability, Corporative Philanthropy and Creating Shared Value," Technium Social Sciences Journal, Technium Science, vol. 10(1), pages 291-298, August.

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