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Does Corporate Sustainability Performance Increase Corporate Financial Performance? Focusing on the Information and Communication Technology Industry in Korea

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  • Seonmin Jung
  • Changi Nam
  • Dong†Hoon Yang
  • Seongcheol Kim

Abstract

Corporate sustainability has increased in importance, because corporations must survive in a social and ecological network as an interdependent going concern. However, from a business perspective, it is an empirical issue whether the firm's corporate sustainability performance is associated with its financial performance. In this paper, based on Ohlson's residual income model, the effect of corporate sustainability performance on financial performance is examined by utilizing the newly developed Korea Sustainability Index as a proxy for corporate sustainability performance. It was found that a firm's corporate sustainability performance is positively associated with its financial performance, and this positive association is more sensitive in the information and communications technology (ICT) industry than in non†ICT firms. Furthermore, this moderating effect is mainly attributable to the service sector in the ICT industry. These effects are prominent in smaller low†leveraged firms. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

Suggested Citation

  • Seonmin Jung & Changi Nam & Dong†Hoon Yang & Seongcheol Kim, 2018. "Does Corporate Sustainability Performance Increase Corporate Financial Performance? Focusing on the Information and Communication Technology Industry in Korea," Sustainable Development, John Wiley & Sons, Ltd., vol. 26(3), pages 243-254, May.
    • Handle: RePEc:wly:sustdv:v:26:y:2018:i:3:p:243-254
    DOI: 10.1002/sd.1698
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    Cited by:

    1. Khine Kyaw & Steen Thomsen & Sirimon Treepongkaruna, 2022. "Firms' potential for economic sustainability and firm value: The moderating role of blockholders," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(5), pages 884-901, October.
    2. Li‐Kai Liao & Yu‐Wei Fan & Ming‐Hsin Shih, 2020. "What drives social responsibility indices returns? Macroeconomics matters," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 514-524, March.
    3. Meltem Kılıç & Hasan Emin Gurler & Ahmet Kaya & Chang Won Lee, 2022. "The Impact of Sustainability Performance on Financial Performance: Does Firm Size Matter? Evidence from Turkey and South Korea," Sustainability, MDPI, vol. 14(24), pages 1-19, December.
    4. Imran Abbas Jadoon & Akhter Ali & Usman Ayub & Muhammad Tahir & Raheel Mumtaz, 2021. "The impact of sustainability reporting quality on the value relevance of corporate sustainability performance," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(1), pages 155-175, January.
    5. Yi Xu & Jian Li & Yongcan Yan & Pengcheng Gao & Heng Xie, 2022. "Can Coordinated Development of Manufacturing and Information Communication Service Industries Boost Economic Resilience? An Empirical Study Based on China’s Provinces," Sustainability, MDPI, vol. 14(17), pages 1-15, August.
    6. Estefanía Montoya-Cruz & José Pedro Ramos-Requena & Juan Evangelista Trinidad-Segovia & Miguel Ángel Sánchez-Granero, 2020. "Exploring Arbitrage Strategies in Corporate Social Responsibility Companies," Sustainability, MDPI, vol. 12(16), pages 1-17, August.
    7. Lei Ji & Chunlin Yuan & Taiwen Feng & Chen Wang, 2020. "Achieving the environmental profits of green supplier integration: The roles of supply chain resilience and knowledge combination," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(4), pages 978-989, July.
    8. Ashfaque Banbhan & Xinsheng Cheng & Nizam Ud Din, 2018. "Financially Qualified Members in an Upper Echelon and Their Relationship with Corporate Sustainability: Evidence from an Emerging Economy," Sustainability, MDPI, vol. 10(12), pages 1-19, December.
    9. £ukasz Ma³ys, 2023. "The approach to supply chain cooperation in the implementation of sustainable development initiatives and company’s economic performance," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 18(1), pages 255-286, March.
    10. Rita Parmawati & Fadli Mulyadi & Rosyani Rosyani & Suaedi Suaedi & Yunikewaty Yunikewaty, 2023. "The Role of Environmental Education and Green Supply Chain Practices in Achieving Sustainable Development: Evidence from Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 13(1), pages 421-430, January.
    11. Milind Kumar Jha & K. Rangarajan, 2020. "The approach of Indian corporates towards sustainable development: An exploration using sustainable development goals based model," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(5), pages 1019-1032, September.

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