Corporate Social and Financial Performance: The Role of Firm Life Cycle in Business Groups
Abstract
:1. Introduction
2. Hypotheses Development
2.1. Corporate Social and Financial Performance
2.2. The CSP–CFP Sensitivity and Firm Life Cycle Stages
2.3. The CSP–CFP Sensitivity and Chaebol Firm Effects
3. Sample Selection and Model
3.1. Sample Selection
3.2. Identification of FLC Stages
3.3. CSP Measurement
3.4. Model
CFP | = | Earnings before interest and taxes divided by total assets |
NW | = | Natural logarithm of the KEJI Index |
SW | = | Stakeholder-weighted KEJI Index |
Chaebol | = | A dummy variable equal to one for firms belonging to business groups and zero otherwise |
SIZE | = | Natural logarithm of total assets |
GRW | = | Sales growth rate over the previous year |
LEV | = | Ratio of debt to total assets |
RND | = | R&D expenses deflated by total assets |
IND | = | Industry dummy |
YD | = | Year dummy |
4. Empirical Results
4.1. Descriptive Statistics
4.2. Correlations between CSP and CFP across FLC Stages
4.3. Relationships between CSP and CFP across FLC Stages
4.4. Chaebols as CSR Commitment
4.5. Endogeneity Tests
5. Conclusions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Companies traded in the Korea Stock Price Index (KOSPI) market from 2013 to 2018 | 4560 | |
(1) | Exclude companies that are not manufacturing industries and have closing months other than December | (344) |
(2) | Exclude companies that do not have the KEJI Index disclosed by the Economic Justice Institute | (2259) |
(3) | Exclude companies that cannot obtain financial data from FnGuide database | (28) |
Final sample | 1929 |
Cash Flows | FLC Stage | |||||||
---|---|---|---|---|---|---|---|---|
Introduction | Growth | Mature | Shake-Out | Shake-Out | Shake-Out | Decline | Decline | |
Operating | - | + | + | - | + | + | - | - |
Investing | - | - | - | - | + | + | + | + |
Financing | + | + | - | - | + | - | + | - |
Panel A. Descriptive on Full Sample | |||||||||
Variable | Mean | Std. Dev. | Min | Quartile | Max | ||||
25% | Median | 75% | |||||||
CFP | 0.043 | 0.047 | −0.424 | 0.019 | 0.038 | 0.063 | 0.604 | ||
NW | 4.126 | 0.049 | 3.944 | 4.094 | 4.127 | 4.160 | 4.279 | ||
SW | 12.133 | 0.634 | 9.966 | 11.724 | 12.166 | 12.568 | 14.408 | ||
SIZE | 26.692 | 1.315 | 23.224 | 25.830 | 26.510 | 27.289 | 32.731 | ||
GRW | 0.046 | 0.316 | −0.731 | −0.049 | 0.023 | 0.100 | 6.805 | ||
LEV | 0.385 | 0.187 | 0.001 | 0.236 | 0.382 | 0.535 | 0.958 | ||
RND | 0.006 | 0.013 | 0.000 | 0.000 | 0.000 | 0.004 | 0.105 | ||
Panel B. Difference Tests of Variables by FLC Stages and Chaebol | |||||||||
Variable | CFP | NW | SW | ||||||
Chaebol | Yes | No | t-Value | Yes | No | t-Value | Yes | No | t-Value |
All | 0.043 (457) | 0.044 (1472) | −0.36 | 4.122 (457) | 4.127 (1472) | −1.85 * | 12.027 (457) | 12.168 (1472) | −4.47 *** |
Introduction | 0.031 (27) | 0.024 (96) | 1.10 | 4.106 (27) | 4.127 (96) | −2.14 ** | 11.916 (27) | 12.146 (96) | −1.89 * |
Growth | 0.038 (123) | 0.039 (365) | −0.16 | 4.137 (123) | 4.148 (365) | −1.12 | 12.167 (123) | 12.218 (365) | −0.80 |
Mature | 0.048 (257) | 0.051 (765) | −0.97 | 4.121 (257) | 4.129 (765) | −2.32 ** | 11.994 (257) | 12.194 (765) | −4.32 *** |
Shake-out | 0.039 (40) | 0.039 (209) | −0.34 | 4.103 (40) | 4.115 (209) | −1.36 | 11.860 (40) | 12.027 (209) | −1.53 |
Decline | 0.027 (10) | 0.028 (37) | −0.94 | 4.096 (10) | 4.118 (37) | −1.49 | 11.675 (10) | 12.009 (37) | −1.69 * |
Variable | CFP | NW | SW | SIZE | GRW | LEV | RND |
---|---|---|---|---|---|---|---|
CFP | 1.000 | ||||||
NW | 0.211 *** | 1.000 | |||||
SW | 0.182 *** | 0.924 *** | 1.000 | ||||
SIZE | 0.024 | 0.147 *** | 0.077 ** | 1.000 | |||
GRW | 0.077 *** | 0.063 *** | 0.068 *** | −0.011 | 1.000 | ||
LEV | −0.268 *** | −0.094 *** | −0.115 *** | 0.190 *** | 0.054 ** | 1.000 | |
RND | 0.070 *** | 0.256 *** | 0.250 *** | 0.060 *** | 0.062 *** | −0.047 ** | 1.000 |
FLC | All | Chaebol | Non-Chaebol | ||||||
---|---|---|---|---|---|---|---|---|---|
NW–CFP | SW–CFP | N | NW–CFP | SW–CFP | N | NW–CFP | SW–CFP | N | |
Introduction | 0.108 | 0.103 | 123 | 0.122 | 0.125 | 27 | 0.142 | 0.130 | 96 |
Growth | 0.180 *** | 0.169 *** | 488 | 0.279 *** | 0.280 *** | 123 | 0.149 *** | 0.132 ** | 365 |
Mature | 0.263 *** | 0.223 *** | 1022 | 0.253 *** | 0.218 *** | 257 | 0.269 *** | 0.227 *** | 765 |
Shake-out | 0.140 ** | 0.104 * | 249 | 0.147 | 0.176 | 40 | 0.145 ** | 0.097 | 209 |
Decline | 0.085 | 0.101 | 47 | 0.321 | 0.370 | 10 | 0.034 | 0.038 | 37 |
Panel A. NW as CSP Measure | ||||||
CFP = α0 + β1NW + β2SIZE + β3GRW + β4LEV + β5RND + ∑IND + ∑IND + ε | ||||||
Variables | Exp. Sign | All | FLC Stage | |||
Introduction | Growth | Mature | Shake-Out | |||
Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | ||
NW | +/− | 0.156 (6.859) *** | 0.036 (0.502) | 0.146 (3.540) *** | 0.202 (6.754) *** | 0.107 (1.303) |
SIZE
| + | 0.002 (2.328) *** | 0.006 (2.114) ** | 0.002 (1.393) | 0.002 (1.303) | −0.004 (−0.904) |
GRW
| + | 0.013 (3.738) *** | 0.026 (1.859) * | 0.029 (4.233) *** | 0.009 (2.193) ** | 0.006 (0.441) |
LEV
| − | −0.068 (−11.785) *** | −0.049 (−2.598) ** | −0.066 (−5.863) *** | −0.075 (−9.618) *** | −0.026 (−1.283) |
RND
| + | −0.011 (−0.134) | −0.071 (−0.221) | −0.122 (−0.906) | −0.061 (−0.608) | 0.585 (1.713) * |
Intercept | +/− | −0.618 (−6.669) *** | −0.241 (−0.811) | −0.570 (−3.368) *** | −0.780 (−6.510) *** | −0.328 (−0.959) |
ID | +/− | Yes | Yes | Yes | Yes | Yes |
YD | +/− | Yes | Yes | Yes | Yes | Yes |
Adjusted R2 | 12.0% | 9.4% | 12.3% | 17.6% | 4.4% | |
F-value | 12.969 *** | 1.578 * | 4.101 *** | 10.881 *** | 1.522 * | |
H0: β1Gro = β1Mat | 27.925 *** | |||||
N | 1929 | 123 | 488 | 1022 | 249 | |
Panel B. SW as CSP Measure | ||||||
CFP = α0 + β1SW + Controls + ε | ||||||
Variables | Exp. Sign | All | FLC Stage | |||
Introduction | Growth | Mature | Shake-Out | |||
Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | ||
SW | +/− | 0.009 (5.029) *** | 0.002 (0.321) | 0.009 (2.820) *** | 0.011 (4.700) *** | 0.005 (0.757) |
Controls | +/− | Yes | Yes | Yes | Yes | Yes |
Adjusted R2 | 11.0% | 9.3% | 11.4% | 15.7% | 3.9% | |
F-value | 11.859 *** | 1.569 * | 3.859 *** | 9.614 *** | 1.463 * | |
H0: β1Gro = β1Mat | 27.228 *** | |||||
N | 1929 | 123 | 488 | 1022 | 249 |
Panel A. Chaebol Firms | |||||||
Variables | Exp. Sign | Chaebol | FLC Stages | ||||
Introduction | Growth | Mature | Shake-Out | ||||
Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | |||
NW
| +/− | 0.149 (4.309) *** | 0.035 (0.204) | 0.148 (1.999) ** | 0.158 (3.222) *** | 0.034 (0.236) | |
SIZE
| + | 0.001 (0.905) | 0.005 (0.399) | 0.002 (0.778) | 0.001 (0.722) | 0.005 (0.554) | |
GRW
| + | 0.024 (2.550) ** | 0.009 (0.102) | 0.026 (1.540) | 0.025 (1.880) * | 0.003 (0.057) | |
LEV
| − | −0.064 (−6.440) *** | −0.175 (−2.190) * | −0.035 (−1.840) * | −0.069 (−4.903) *** | −0.018 (−0.287) | |
RND
| + | 0.082 (0.469) | −0.538 (−0.284) | 0.595 (1.888) * | 0.144 (0.653) | 1.166 (0.212) | |
Intercept
| +/− | −0.503 (−3.666) *** | 0.135 (0.218) | −0.489 (−1.533) | −0.532 (−2.799) *** | 0.295 (0.478) | |
ID | +/− | Yes | Yes | Yes | Yes | Yes | |
YD | +/− | Yes | Yes | Yes | Yes | Yes | |
Adjusted R2 | 21.7% | 2.7% | 34.0% | 23.3% | 2.3% | ||
F-value | 6.757 *** | 1.708 * | 3.853 *** | 4.694 *** | 1.617 * | ||
H0: β1Gro = β1Mat | 8.269 *** | ||||||
N | 457 | 27 | 123 | 257 | 40 | ||
Panel B. Non-Chaebol Firms | |||||||
Variables | Exp. Sign | Non-Chaebol | FLC Stages | ||||
Introduction | Growth | Mature | Shake-Out | ||||
Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | |||
NW
| +/− | 0.171 (5.871) *** | 0.098 (0.917) | 0.110 (2.187) ** | 0.249 (6.494) *** | 0.122 (1.152) | |
Controls | +/− | Yes | Yes | Yes | Yes | Yes | |
Adjusted R2 | 11.1% | 9.2% | 11.1% | 16.7% | 4.8% | ||
F-value | 9.362 *** | 1.438 * | 3.064 *** | 7.973 *** | 1.480 * | ||
H0: β1Gro = β1Mat | 19.427 *** | ||||||
N | 1472 | 96 | 365 | 765 | 209 | ||
Panel C. Moderating Effect of Chaebol Firms | |||||||
CFP = α0 + β1CSP + β2Chaebol + β3CSP × Chaebol + Controls + ε | |||||||
Variable | Exp. Sign | A11 | Growth | Mature | |||
Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | ||
NW
| + | 0.179 (6.61) *** | 0.141 (2.96) *** | 0.242 (6.82) *** | |||
SW
| + | 0.011 (4.67) *** | 0.009 (2.28) ** | 0.014 (4.77) *** | |||
Chaebol
| − | 0.004 (1.28) | 0.004 (1.29) | 0.001 (0.16) | 0.003 (0.34) | 0.003 (0.74) | 0.003 (0.64) |
NW ×
Chaebol | +/− | −0.060 (−1.34) | 0.017 (0.19) | −0.109 (−1.92) * | |||
SW ×
Chaebol | +/− | −0.002 (−0.53) | 0.003 (0.34) | −0.006 (−1.65) * | |||
Controls | +/− | Yes | Yes | Yes | Yes | Yes | Yes |
Adjusted R2 | 12.1% | 11.0% | 11.9% | 11.1% | 17.8% | 15.7% | |
F-value | 12.052 *** | 10.956 *** | 3.746 *** | 3.535 *** | 10.190 *** | 8.918 *** | |
N | 1929 | 1929 | 488 | 488 | 1022 | 1022 |
Panel A. 2SLS (Two-Stage Square) | |||||||||
First Stage Equation: CSP = α0 + β1CFP + β2Pre_CSP + β3SIZE + ∑IND + ∑IND + ε Second Stage Equation: CFP = α0 + β1CSPHAT + β2SIZE + β3GRW + β4LEV + β5RND + ∑IND + ∑IND + ε | |||||||||
Variable | Exp. Sign | The First Stage | The Second Stage | ||||||
Estimate | (t-Value) | Estimate | (t-Value) | Estimate | (t-Value) | Estimate | (t-Value) | ||
CFP | + | 0.101 | (3.86) *** | 0.939 | (2.97) *** | ||||
Pre_NW | + | 0.468 | (18.15) *** | ||||||
Pre_SW | + | 0.545 | (22.24) *** | ||||||
NWHAT | + | 0.555 | (9.89) *** | ||||||
SWHAT | + | 0.025 | (6.22) *** | ||||||
SIZE | + | 0.003 | (2.31) ** | 0.013 | (1.09) | −0.001 | (−0.01) | 0.003 | (2.00) ** |
GRW | + | 0.048 | (5.66) *** | 0.051 | (5.95) *** | ||||
LEV | − | −0.069 | (−9.77) *** | −0.072 | (−9.94) *** | ||||
RND | + | −0.111 | (−1.24) | −0.070 | (−0.75) | ||||
Intercept | +/− | 2.119 | (20.20) *** | 5.432 | (13.57) *** | −2.201 | (−9.86) *** | −0.288 | (−5.49) *** |
ID | +/− | Yes | Yes | Yes | Yes | ||||
YD | +/− | Yes | Yes | Yes | Yes | ||||
Adjusted R2 | 36.7% | 44.3% | 21.9% | 16.5% | |||||
F-value | 36.196 *** | 49.191 *** | 15.136 *** | 11.815 *** | |||||
Panel B. Growth vs. Mature | |||||||||
CFP = α0 + β1CSPHAT + Controls + ε | |||||||||
Variable | Exp. Sign | Growth | Mature | Growth | Mature | ||||
Estimate | (t-Value) | Estimate | (t-Value) | Estimate | (t-Value) | Estimate | (t-Value) | ||
NWHAT | + | 0.424 | (3.75) *** | 0.658 | (8.57) *** | ||||
SWHAT | + | 0.016 | (1.91) * | 0.030 | (5.57) *** | ||||
Controls | +/− | Yes | Yes | Yes | Yes | ||||
Adjusted R2 | 22.8% | 24.2% | 13.1% | 19.3% | |||||
F-value | 3.619 *** | 10.807 *** | 3.008 *** | 8.341 *** | |||||
H0: β1Gro = β1Mat | 13.489 *** | 16.028 *** | |||||||
N | 488 | 1022 | 488 | 1022 | |||||
Panel C. Moderating Effect of Chaebol Firms | |||||||||
CFP = α0 + β1CSPHAT + β2Chaebol + β3CSPHAT × Chaebol + Controls + ε | |||||||||
Variable | Exp. Sign | All | Growth | Mature | |||||
Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | Estimate (t-Value) | ||||
NWHAT
| + | 0.562 (9.99) *** | 0.424 (3.76) *** | 0.666 (8.67) *** | |||||
SWHAT
| + | 0.028 (6.16) *** | 0.013 (1.38) | 0.036 (5.87) *** | |||||
Chaebol
| − | 0.004 (1.28) | 0.086 (1.09) | −0.003 (−0.22) | −0.125 (−0.83) | −0.003 (−0.25) | −0.003 (−0.32) | ||
NWHAT ×
Chaebol | +/− | −0.001 (−0.87) | 0.002 (1.12) | −0.001 (−1.95) ** | |||||
SWHAT ×
Chaebol | +/− | −0.007 (−1.01) | 0.011 (0.88) | −0.016 (−1.79) * | |||||
Controls | +/− | Yes | Yes | Yes | Yes | Yes | Yes | ||
Adjusted R2 | 20.6% | 16.6% | 16.6% | 13.2% | 24.2% | 19.5% | |||
F-value | 14.612 *** | 10.973 *** | 3.516 *** | 2.842 *** | 10.355 *** | 7.811 *** | |||
N | 1929 | 1929 | 488 | 488 | 1022 | 1022 |
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Park, B.-J. Corporate Social and Financial Performance: The Role of Firm Life Cycle in Business Groups. Sustainability 2021, 13, 7445. https://doi.org/10.3390/su13137445
Park B-J. Corporate Social and Financial Performance: The Role of Firm Life Cycle in Business Groups. Sustainability. 2021; 13(13):7445. https://doi.org/10.3390/su13137445
Chicago/Turabian StylePark, Bum-Jin. 2021. "Corporate Social and Financial Performance: The Role of Firm Life Cycle in Business Groups" Sustainability 13, no. 13: 7445. https://doi.org/10.3390/su13137445