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Another Form of Greenwashing: The Effects of Chaebol Firms’ Corporate Governance Performance on the Donations

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  • Manseek Choi

    (Department of Taxation and Accounting, Busan Kyungsang College, Busan 47583, Korea)

  • Soonwook Hong

    (Division of Maritime Business and Economics, Korea Maritime and Ocean University, Busan 49112, Korea)

Abstract

Environmental, social, and governance (ESG) metrics are widely used to measure the firms’ social performance. In this regard, donation expenses are one of the outcomes for the firms’ effort to build, grow, and maintain the social value. However, firms may expense a trivial or minimum amount of donations, considering the corporate size, in order to disguise themselves as a “good company”. In this paper, exploiting 2010–2019 Korean Stock Exchange (KSE) market listed companies’ financials and ESG scores, we examine whether Chaebol firms with good governance “actually” spend more donation expenses. We predict and find that good governance does not actually lead to greater donation expenses among Chaebol firms, despite the positive relations between governance and donation expenses in general. Overall, our findings highlight that good Chaebol companies determined by ESG metrics may not be real charitable companies. Our findings provide counterevidence against the notion that firms with a higher ESG score are more likely to be charitable.

Suggested Citation

  • Manseek Choi & Soonwook Hong, 2022. "Another Form of Greenwashing: The Effects of Chaebol Firms’ Corporate Governance Performance on the Donations," Sustainability, MDPI, vol. 14(6), pages 1-12, March.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:6:p:3373-:d:770325
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