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Takeover threats and environmental, social, and governance performance: Evidence from Korea

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  • Wang, Boxian
  • Shin, Hyunhan
  • Lee, Jiyoon

Abstract

This paper examines the association between takeover threats and environmental, social, and governance (ESG) performance, using anti-takeover provisions (ATPs) as a gauge to measure the extent to which firms guard against hostile takeover threats. By analyzing data from 2011 to 2020 of publicly traded Korean companies, we uncover a significant negative association between the adoption of ATPs and ESG performance. Our findings suggest that a reduction in takeover threats is associated with a deterioration in ESG performance. This result aligns with the shareholder view, indicating that managers prioritize their own interests over maximizing shareholder welfare when their positions are secured by takeover protections. Our evidence provides valuable insights for investors and contributes to a broader understanding of the role of takeover threats in ESG performance. Additionally, this study addresses a critical gap in the literature concerning the association between takeover threats and ESG performance in the context of emerging markets.

Suggested Citation

  • Wang, Boxian & Shin, Hyunhan & Lee, Jiyoon, 2025. "Takeover threats and environmental, social, and governance performance: Evidence from Korea," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325001916
    DOI: 10.1016/j.frl.2025.106927
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    Keywords

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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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