Does Analyst Coverage Enhance Firms’ Corporate Social Performance? Evidence from Korea

摘要

This paper examines the association between analyst coverage and corporate social performance, using comprehensive donation expense data from Korea. Following analyst “investor recognition view”, analyst coverage might be the one of the key determinants of firms’ CSP to higher firms’ reputational capital. The empirical results suggest that analyst coverage is, on average, positively associated with corporate social performance (CSP) and that this positive association is more pronounced in a non-chaebol (i.e., non-large industrial conglomerate) sample. Further this result is consistent with a battery of robustness tests, such as alternative use of CSP, interaction analysis, two-stage least square regression (2SLS) and alternative use of analyst coverage. This paper goes beyond prior literature using audited donation expense and chaebol data, this paper shows that analysts could partially provide information to enhance firms’ reputations and thus their reputational capital by attending to CSP which would be regarded as pertinent firms’ sustainability. Furthermore, this tendency is more pronounced in relatively lower-reputation firms, such as non-chaebol ones in Korea. Mainstream literature on CSR is conducted within the context of developed countries, such as the U.S. or the U.K., leaving the empirical question as to whether such results apply to other developing countries such as Korea. So, using unique corporate giving data, this paper investigate analyst coverage might enhance firms’ CSP even in a relatively poor information environment such as Korea.