How Does CSR Activity Affect Sustainable Growth and Value of Corporations? Evidence from Korea

Abstract

This study explores the relationship between Korean listed companies’ corporation social responsibility (CSR) activities and their sustainable growth and valuation, focusing specifically on the nonlinear aspect. The nonlinear quantile regressions used in this study reported that CSR activities increased corporation value exclusively in the middle-range groups (i.e., τ_25, τ_50, τ_75) of Tobin’s q, a proxy for corporation growth and value. However, the linear ordinary least squares (OLS) regression did not indicate similar results. Our findings also showed that CSR activities affect the valuation of Korean listed corporations in a nonlinear, rather than in a linear way. Considering that most prior studies are devoted to reporting linear results from classical ordinary least squares estimations between CSR activities and corporation value, our study fills the gap in the literature. The findings of this study may provide corporation managers and researchers with valuable data concerning a corporation’s optimal investment point for their CSR activities for sustainable growth and the maximization of corporation value.