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

Abstract

Newly listed firms can actively engage in corporate social responsibility (CSR) to build reputation, but they may postpone CSR until they have enough slack for it. Related to this, prior literature does not provide consistent results, the US evidence supports the latter while the Chinese results support the former. To extend the literature, we use Korean listed companies and examine the association between the listing period and CSR. We further investigate the effect of analyst following on the relationship. The empirical results show that firms with a shorter listing period invest more in CSR and that the association exists only in firm-years followed by analysts, indicating the importance of the information environment to inform CSR. We additionally find that young listed companies mainly use social contribution and soundness, which can be discretionarily conducted from a short-term perspective. The results of this study using CSR to obtain a short-term objective suggest that policymakers need to analyze a firm's behavior from various perspectives and to establish proper guidelines to achieve a long-term goal of CSR sustainability.