Effects of Corporate Life Cycle on Corporate Social Responsibility: Evidence from Korea

Abstract

Few studies examine how firms make strategic decisions over time. In this study, we test whether a firm undertakes corporate social responsibility (CSR) activities as a function of its life-cycle stage. Drawing on prior CSR research that finds ethical concerns and opportunistic behavior to be two key motivations that underpin CSR activities, we hypothesize that firms in their growth stage are positively associated with CSR, while firms in stage of decline are less likely to invest in CSR. The empirical findings of our study—derived by leveraging a sample of South Korean listed firms—are consistent with these predictions. We further find that in the growth stage, group-affiliated firms are more engaged in CSR than are unaffiliated firms. Given that affiliated firms can share the resources of other group-member firms, this evidence supports the slack resource hypothesis. Overall, our results indicate that firms have different CSR strategies, depending on their life-cycle stage.

The Effect of Listing Period on Corporate Social Responsibility: Evidence from Korea

“…Unlike the above research analyzing the US companies, Yao et al [2] reported that younger Chinese firms are likely to disclose CSR, indicating their stronger desire for the capital market. Similarly, Lee and Choi [9] used Korean samples and found that firms at the growth stage invest more in CSR. These contrasting evidences show that the relationship between corporate age and CSR is inconsistent and unclear.…”

“…This trait of Korean CSR may enable companies with a short listing period to engage in CSR activities to enhance firm value. Lee and Choi [9] increased this possibility by showing that in Korea, growth firms are likely to invest more in CSR than those in other life-cycle stages. In addition, CSR plays an important role in broadening a firm's shareholder base by attracting more institutional investors and increases stock liquidity [19].…”

“…Following prior studies, we used the Korea Economic Justice Institute (KEJI) index as a proxy for CSR performance [9,23]. The KEJI index is widely acknowledged by professionals and civic groups as an appropriate proxy for CSR activities in Korea.…”

“…To test the association between the listing period and CSR performance, we use the following regression model based on Lee and Choi [9]:…”

The Effect of Corporate Social Performance on Audit Hours: Moderating Role of the Emphasis of Matter Paragraphs in Audit Report

“…Following the literature, we used CSR scores released by The Korea Economic Justice Institute (KEJI) as a proxy for CSP [33,34]. The KEJI annually evaluates Korean public companies in terms of social responsibility and ethical management and publicly provides CSP of the top 200 companies.…”