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Examining Firms’ ESG Grades Determinants Through Financial and Non-Financial Characteristics During Covid-19 in Korea

Author

Listed:
  • SONG, MIN KYUNG

    (Gachon University, South Korea)

  • KIM, CHUNGAH

    (Gachon University, South Korea)

  • KIM , SANG HYUCK

    (Gachon University, South Korea)

Abstract

This study employs Ordinary Least Squares (OLS) and quantile regression analyses to examine the determinants of Environmental, Social, and Governance (ESG) grades based on financial and non-financial characteristics of Korean companies amidst the global economic recession triggered by the COVID-19 pandemic. We investigate whether different determinants exist for varying levels of ESG grades (lower, middle, and higher groups). Analyzing cross-sectional data from 660 Korean companies, we find that both financial and non-financial characteristics significantly impacted ESG grades during the pandemic. Key determinants include firm value, size, and cash liquidity in financial characteristics, while firm age and industry type are vital non-financial determinants. Furthermore, the results highlight distinctions among ESG sub-dimensions, revealing that financial attributes predominantly influence environmental grades, whereas both financial and non-financial aspects shape social and governance grades. The findings elucidate ESG grade determinants and their differential relationships with various company characteristics during the challenging COVID-19 period in Korea.

Suggested Citation

  • Song, Min Kyung & Kim, Chungah & Kim , Sang Hyuck, 2024. "Examining Firms’ ESG Grades Determinants Through Financial and Non-Financial Characteristics During Covid-19 in Korea," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 49(1), pages 125-150, March.
    • Handle: RePEc:ris:jecdev:0083
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    Keywords

    ESG grades; Economic Recession; Financial Characteristics; Non-Financial Characteristics; COVID-19 Pandemic; Korean Firms;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F69 - International Economics - - Economic Impacts of Globalization - - - Other
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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