Kim, Jong-Hee
A icle
A S udy on he Role o Economic and Ins i u ional
En i onmen on he Co po a e Responsibili y Pe o mance
and i s Synch oniza ion
Eas Asian Economic Re iew (EAER)
P o ided in Coope a ion wi h:
Ko ea Ins i u e o In e na ional Economic Policy (KIEP), Sejong-si
Sugges ed Ci a ion: Kim, Jong-Hee (2024) : A S udy on he Role o Economic and Ins i u ional
En i onmen on he Co po a e Responsibili y Pe o mance and i s Synch oniza ion, Eas Asian
Economic Re iew (EAER), ISSN 2508-1667, Ko ea Ins i u e o In e na ional Economic Policy (KIEP),
Sejong-si, Vol. 28, Iss. 4, pp. 459-489,
h ps://doi.o g/10.11644/KIEP.EAER.2024.28.4.442
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Eas Asian Economic Re iew ol. 28, no. 4 (Decembe 2024) 459-489
h ps://dx.doi.o g/10.11644/KIEP.EAER.2024.28.4.442
ⓒ Ko ea Ins i u e o In e na ional Economic Policy
A S udy on he Role o Economic and Ins i u ional
En i onmen on he Co po a e Responsibili y Pe o mance
and i s Synch oniza ion
Jong-Hee Kim†
Jeonbuk Na ional Uni e si y
[email p o ec ed]
1
This pape analyzed how he coun y’s ins i u ional and poli ical en i onmen a ec
ESG pe o mance o he companies in he coun y. An empi ical analysis o his s udy
esul s a e as ollows.
Fi s , he clea di e ence in inancial a iables such as he g ow h a e o o eign di ec
in es men , pension und asse s o GDP a io, and s ock ma ke e u n a e was ound
o he signi icance be ween ad anced economies and eme ging ma ke s. Second, in
wo g oups, he ins i u ional indexes, which e e o go e nmen policy and he coun y’s
ins i u ional en i onmen such as he ule o law, he go e nmen e ec i eness,
co up ion con ol, and ci izens’ oice and accoun abili y showed a posi i e ela ionship
wi h ESG pe o mance o he companies. They had a pa icula ly la ge posi i e e ec
on he companies in eme ging ma ke s. And hi d, companies’ synch oniza ion wi h
o he companies’ high ESG pe o mance had a posi i e e ec on hei ESG
pe o mance, and such a endency was much s onge in he companies o eme ging
ma ke s. Addi ionally, ins i u ional dimension had a posi i e e ec on he companies’
synch oniza ion, and such a endency was much s onge in eme ging ma ke s.
Keywo ds: Co po a e Social Responsibili y, ESG Pe o mance, Ins i u ional En i onmen ,
ESG Synch oniza ion
JEL Classi ica ion: G30, G38, O10
I. Backg ound
Since he mid- o la e 2000, among de eloped coun ies’ inancial and s ock ma ke s,
Co po a e Social Responsibili y (CSR) is he e m ha is being b ough up mo e
equen ly. In he pas , he inancial success o a co po a ion was ega ded as an
† Co esponding Au ho , P o esso , Economics College o Comme ce, Jeonbuk Na ional Uni e si y,
567 Baekje-dae o, Jeonju-si, Jeollabuk-do, 561-756, Republic o Ko ea.
ID
460 Jong-Hee Kim
ⓒ Ko ea Ins i u e o In e na ional Economic Policy
impo an aspec when conside ing whe he o in es in a company. Howe e , in he
p esen -day, non- inancial success is also becoming an impo an elemen o conside
when choosing a company in which o in es .
CSR akes in o accoun a company’s managemen ac i i ies, and conside s no only
i s economic g ow h, bu also how i mus balance i s economic g ow h wi h social and
en i onmen al esponsibili y. I s ipula es ha a company mus ac esponsibly
ega ding i s employees and cus ome s, and ha he s ockholde is held esponsible o
all pa ies in ol ed, such as coope a i e and compe i i e companies, as well as he
la ge communi y. In he case ha an issue is no handled esponsibly by he company,
i s compe i i eness and possibili y o g ow h weakens. Acco ding o CSR, co po a e
sus ainabili y managemen is posi ioned as a necessa y goal o he company’s
managemen . Also, he in es o ’s con inued in e es in he company is in luenced by
he success o i s co po a e sus ainabili y managemen .
As an al e na i e way o measu e CSR, ESG has ecen ly spa ked wo ldwide. ESG
signi ies en i onmen al esponsibili y, social esponsibili y, and go e nance, and has
come o be an in es men guide as i signals a new pa adigm o business managemen
s a egy. Essen ially, ESG can be in e p e ed as a alue sys em ha a emp s o ealize
con inued p ospe i y o humankind.
The scale o in es ing in companies based on hei ESG has been consis en ly
inc easing. In 2020, he global scale o in es men in ESG was 35.0 illion dolla s.
This has inc eased 15% om 30 illion 700 billion dolla s in 2018. In 2022, he scale
was 30.3 illion dolla s,1 bu i was due o he s eng hened s anda d o p e en he
g een washing2 om sus ainable in es men . Addi ionally, 35.9% o he in es men
scale is made up o in es men s om he U.S., Eu ope, Aus alia, Japan, Canada, e c.
The impo ance o ESG has g own in eme ging ma ke s, bu awa eness o he scale o
in es men is weak compa ed o o he highly de eloped na ions.
In compa ison o he case o ad anced economies, he coun ies in eme ging
ma ke s ha e shown insu icien awa eness and success in hei companies’ ESG. In
ad anced economies, companies a e highly in ol ed in ac i i ies ela ing o non-
inancial success, such as co po a e social esponsibili y ac i i ies and esponsible
in es ing. In compa ison, he companies in eme ging ma ke s a e jus ecen ly
1 ‘Global Sus ainable In es men Re iew’, 2023.
2 I is he ac o making alse o misleading s a emen s abou he en i onmen al bene i s o a p oduc
o p ac ice.
A S udy on he Role o Economic and Ins i u ional En i onmen on he Co po a e Responsibili y Pe o mance and i s Synch oniza ion
461
ⓒ 2024 Eas Asian Economic Re iew
beginning o show an in e es in ESG. While eme ging ma ke s coun ies’ economy
and echnological de elopmen ha e me ha o highly de eloped coun ies, i has no
ye achie ed he same s anda d in a eas ela ed o he en i onmen o ene gy usage. As
such, i is necessa y o he coun ies o ind ways o cope wi h he apid ins i u ional
changes ela ed o ESG.
Al hough he e is exis ing s udy ega ding di e en companies’ success in ESG
based on companies’ inancial success and alue, he e is only limi ed s udy on how
his ela es o he coun ies he companies belong o, and how hei economic, poli ical
and ins i u ional quali ies a ec he success o ESG. In o he wo ds, he e is insu icien
esea ch on how exogenous a iables a ec s companies’ ESG. The e a e many ac o s
ha a ec a company’s ESG, bu abo e all else, i is di icul o o ganize panel da a
based on he ESG pe o mance o companies in mul iple coun ies. In o he wo ds, i
is di icul o compose sou ce ma e ial ha commonly con ains a coun y’s indi idual
companies’ ESG da a.
Taking his di icul y in o accoun , his s udy uses da a om 16 coun ies ha
con ains in o ma ion ega ding each coun y’s companies’ ESG. And i also a emp s
o examine how each coun y’s espec i e economic, poli ical, and ins i u ional
di e ences in luence he success o he companies’ ESG. Speci ically i in es iga es
he clea di e ence o he ela ionship be ween ESG pe o mance and coun y’s
exogenous aspec s by classi ying 16 coun ies in o 8 ad anced economies (Aus alia,
F ance, Ge many, Japan, Sweden, Swi ze land, Uni ed Kingdom, Uni ed S a es) and
8 eme ging ma ke s (China, Hong Kong, India, Indonesia, Malaysia, Singapo e, Sou h
Ko ea, Thailand).
While ESG, GDP, and GNI al eady sepa a e highly de eloped coun ies om o he
coun ies, he no maliza ion and ins i u ionaliza ion o ESG as i es ablishes i sel in
he global economy has he possibili y o ha m companies in eme ging ma ke s. This
is because ESG has become a s anda d o compa ison o companies when hey a e
e alua ed as possible in es men oppo uni ies by global unds, as companies can be
excluded as candida es i hey do no mee he s anda d. As a esul , analyzing how he
exogenous aspec s in a ious coun ies a ec companies’ ESG’s pe o mance, such as
he coun y’s policies, economy, and ins i u ional di e ences, can be a good guideline
o how i ms can imp o e hei ESG pe o mance. Shedding ligh on his guideline is
he objec i e o his s udy.
462 Jong-Hee Kim
ⓒ Ko ea Ins i u e o In e na ional Economic Policy
II. Li e a u e Re iew
Fi s ly, in he opic o he companies’ social esponsibili y p oxy as a a iable
a ec ing ESG, di e se s udy was comple ed. Gjølbe g (2009) and Skouloudis (2014)
used well- ega ded indexes om epu able ins i u ions, like he Dow Jones
Sus ainabili y Index (DJSI), Global 100, and he UN Global Compac . These indexes
ocus on co po a e social esponsibili y and sus ainabili y and publish anked epo s
o applicable companies each yea .
In compa ison, Bala ba (2012), Lin e al. (2017) used g ades gi en o ESG, bu in
he speci ic ca ego ies e alua ed he e we e di e ences be ween coun ies. As a esul ,
he e was di icul y in compa ing he success be ween he companies e alua ed.
Acco ding o Yamaguchi (2008) and Nelling and Webb (2009), i is di icul o p o e
a ela ionship o di ec causa ion be ween wo a iables because o he un us wo hy
nume al a ing scale measu ing he co po a e social esponsibili y when using
companies as he uni o measu e.
Secondly, in he case o he ela ionship be ween ESG and companies’ alue, he
con adic o y s udy esul s a e mixed up. Acco ding o Lin e al (2009), and Ha ch and
Mi is (2010), he e is a signi ican , posi i e ela ionship be ween he success o a
company’s co po a e social esponsibili y and inancial success. This is because hey
ound ha , in he long e m, a gi en company’s social esponsibili y inc eases i s
p oduc ion and e ec i e managemen and dec eases i s expenses.
This also connec s inancial success wi h he s ockholde s’ alue which, as a esul ,
allows he company o acqui e mo e us wo hy s ockholde s. Acco ding o G ego y
e al. (2016) s eng hening a company’s CSR imp o es he ela ionship be ween
s ockholde s, NGOs, and consume s. As a esul o his, b and equi y also saw an
inc ease. God ey, Me ill, and Hansen (2009), Edams (2011), and G ego y e al.
(2016) ound ha , om a long- e m pe spec i e, ac i ely pa icipa ing in co po a e
social esponsibili y ac i i ies ga e a compe i i e ad an age when making in es men
decisions.
On he o he hand, esea che s such as Palme , Oa es and Po ey (1995), and Ba nea
and Rubin (2005) ega d CSR as an unnecessa y expense ha can nega i ely in luence
he alue o co po a ions. They also asse ha CSR can c ea e o he p oblems ela ed
o he capi al s uc u e and owne ship o he company, which has he possibili y o
de alue he company.
A S udy on he Role o Economic and Ins i u ional En i onmen on he Co po a e Responsibili y Pe o mance and i s Synch oniza ion
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And hi d, in he a emp o asce ain i he e is any meaning ul impac by coun ies’
economy and poli ical policies on ESG, he e is ela i ely limi ed esea ch co e ing
how a coun y’s economic s a e, ins i u ions, and policies a ec companies’ ESG
pe o mance. Campbell (2007) shows, om an ins i u ional pe spec i e, ha he
p ima y a iables a ec ing di e en coun ies’ companies’ social esponsibili y a e he
a ious economic en i onmen s and ins i u ions exis ing wi hin ha coun y. Chih e
al. (2010) shows ha as he concen a ion o ma ke compe i i eness inc eases he wo
a iables es ablish a posi i e co ela ion. O li zky e al. (2003), and Beu den and
Gossling (2008) shows ha in coun ies wi h s ic e laws and es ic ions, companies
end o be mo e ac i e in CSR.
The esea ch also shows ha each coun y’s economic si ua ion and poli ical
policies a ec s i s CSR, and ha each company’s ESG pe o mance depends on which
indus y he company belongs o. Bala ba (2012) shows ha while he ela ionship
be ween he wo a iables depends on he indus y, he indus ies wi h he mos
posi i e co ela ion a e he cons uc ion indus y, he elec ic and gas indus y, and he
ene gy ield.
Finally, he main a iables o his pape a e closely ela ed o he ESG pe o mance.
The ins i u ional in es o s can play an impo an ole o in he social esponsibili y
in es men . Hence, he e is posi i e ela ionship be ween pension und asse s and ESG
pe o mance. Chung e al. (2002) and Gugle e al. (2008) ound ha he highe sha e
a io o ins i u ional in es o s can be led o he highe pe o mance o social
esponsibili y o he i m om he be e ma ke moni o ing unc ion.
And in he case o esul o ela ionship be ween ESG pe o mance and s ock ma ke
e u n a e, when conside ing a company’s g ow h s age, no signi icance was ound
be ween ESG pe o mance and co po a e alues. Howe e , as he company g ew and
eached a s able s a e, he wo a iables de eloped a posi i e ela ionship. Simila
esul s can be seen in s udies such as Bo ge s e al. (2013) and Nolle e al. (2016).
Addi ionally, ESG pe o mance can be imp o ed depending on he s a e o he
ins i u ional and poli ical en i onmen o he coun y. Campbell (2007) e ealed ha
he economic ins i u ional en i onmen o each coun y a e majo a iables as ac o s
a ec ing he social esponsibili y o indi idual companies om an ins i u ional poin
o iew.
In ela ion o his, he majo i y o he exis ing esea ch on ESG is ocused on
companies’ inancial s uc u e, how he success o ESG can imp o e he company’s
inancial s uc u e and, ul ima ely, inc ease he company’s o e all alue. The e is
464 Jong-Hee Kim
ⓒ Ko ea Ins i u e o In e na ional Economic Policy
ela i ely less esea ch abou how coun ies’ ins i u ions and policies can e ec a
ce ain company’s ESG. Howe e , depending on wha coun y he company belongs
o, ha coun y’s economic, ins i u ional, and poli ical si ua ion can in luence he
ela ionship be ween he company’s CSR and inancial pe o mance. As such, he e is
a need o esea ch ha compa es each coun y’s common ESG pe o mance wi h i s
CSR pe o mance, which in u n can e lec how companies’ ESG pe o mance is
a ec ed by ha coun y’s unique ai s.
Ш. Model and Da a
The gene al classi ica ion o he En i onmen (E), Social (S) and Go e nance (G)
pilla s a e he same o each coun y, bu speci ic c i e ia be ween coun ies di e . And
o compa e he ESG pe o mance ac oss mul iple coun ies, common c i e ia a e
equi ed. The e a e speci ic c i e ia wi hin he ESG pilla s ha di e be ween coun ies,
he e a e also ields ha he coun ies ha e in common. In he case o he En i onmen
(E) pilla , he common c i e ia a e esou ce use, emissions, and en i onmen al
inno a ion. The common ields in he Social (S) pilla a e wo k o ce, human igh s,
communi y, and p oduc esponsibili y. As o he Co po a e Go e nance (G) pilla ,
he e is managemen , sha eholde s, and CSR s a egy. Each ca ego y was gi en a aw
sco e ou o 100 poin s.
To no malize each companies’ aw ESG sco e, one can conside a weigh ed a e age
om a simple weigh ed alue me hod. Howe e , his way can be a oused some biases
such as he concen a ion o la ge i ms, egional a ia ion, and exclusion o speci ic
indus y. A la ge i m eases o ake high sco e o ESG pe o mance using he high
le el o capi al and human sou ce. And egional a ia ion can be exis ed om da a
disclosu e. Mo e speci ically, a speci ic indus y, which is in he ela i e isk ield can
be excluded.
To sol e his p oblem, his s udy use PCA (P incipal Componen Analysis) me hod.
PCA me hod is a dimensionali y educ ion me hod ha is o en used o educe he
dimensionali y la ge da a se s, by ans o ming a la ge se o a iables in o a smalle
one ha s ill con ains mos o he in o ma ion in he la ge se . The o mula o PCA o
his s udy is as ollows.
𝐸𝐸𝑖𝑖𝑘𝑘=𝛼𝛼1𝑥𝑥11+𝛼𝛼2𝑥𝑥12+𝛼𝛼3𝑥𝑥13+𝜇𝜇𝑖𝑖 (1)-1
A S udy on he Role o Economic and Ins i u ional En i onmen on he Co po a e Responsibili y Pe o mance and i s Synch oniza ion
465
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𝑆𝑆𝑖𝑖𝑘𝑘=𝛽𝛽1𝑥𝑥21+𝛽𝛽2𝑥𝑥22+𝛽𝛽3𝑥𝑥23+𝛽𝛽4𝑥𝑥24+𝜇𝜇𝑖𝑖 (1)-2
𝐺𝐺𝑖𝑖𝑘𝑘=𝛾𝛾1𝑥𝑥31+𝛾𝛾2𝑥𝑥32+𝛾𝛾3𝑥𝑥33+𝜇𝜇𝑖𝑖 (1)-3
He e, 𝑘𝑘, is he coun y and 𝑖𝑖 is he company o he coun y. 𝑥𝑥11, 𝑥𝑥12, and 𝑥𝑥13
a e he i ems o he En i onmen (E) pilla , which con ains esou ce use (𝑥𝑥11),
emissions (𝑥𝑥12), and en i onmen al inno a ion (𝑥𝑥13) espec i ely. 𝑥𝑥21, 𝑥𝑥22, 𝑥𝑥23,
and 𝑥𝑥24 a e he i ems o he Social (S) pilla , which con ains wo k o ce (𝑥𝑥21), human
igh s (𝑥𝑥22), communi y (𝑥𝑥23), and p oduc esponsibili y (𝑥𝑥24). And 𝑥𝑥31, 𝑥𝑥32, and
𝑥𝑥33 a e he i ems o he Co po a e Go e nance (G) pilla , which con ains managemen
(𝑥𝑥31), sha eholde s (𝑥𝑥32), and CSR s a egy (𝑥𝑥33) espec i ely. Using he abo e
o mulas, i is possible o ge he ac o loading (𝑥𝑥∗) and weigh ed alue (w, 0 ≤
𝑤𝑤𝑖𝑖𝑖𝑖′≤1, ∑𝑤𝑤𝑖𝑖𝑖𝑖′= 1) o each i em o ESC o indi idual companies.
The dimensions (𝑑𝑑) o h ee pilla s o ESG can be calcula ed using h ee o mulas
as ollows.
𝐸𝐸𝑖𝑖𝑘𝑘(𝑑𝑑1) = 1
2��𝑥𝑥11
∗2+𝑥𝑥12
∗2+𝑥𝑥13
∗2
�𝑤𝑤11
2+𝑤𝑤12
2+𝑤𝑤13
2+ �1−�(𝑤𝑤11−𝑥𝑥11
∗)2+(𝑤𝑤12−𝑥𝑥12
∗)2+(𝑤𝑤13−𝑥𝑥13
∗)2
𝑤𝑤11
2+𝑤𝑤12
2+𝑤𝑤13
2�� (2)-1
𝑆𝑆𝑖𝑖𝑘𝑘(𝑑𝑑2)=
1
2��𝑥𝑥21
∗2+𝑥𝑥22
∗2+𝑥𝑥23
∗2+𝑥𝑥24
∗2
�𝑤𝑤21
2+𝑤𝑤22
2+𝑤𝑤23
2+𝑤𝑤24
2+ �1−�(𝑤𝑤21−𝑥𝑥21
∗)2+(𝑤𝑤22−𝑥𝑥22
∗)2+(𝑤𝑤23−𝑥𝑥23
∗)2+(𝑤𝑤24−𝑥𝑥24
∗)2
𝑤𝑤21
2+𝑤𝑤22
2+𝑤𝑤23
2+𝑤𝑤24
2��
(2)-2
𝐺𝐺𝑖𝑖𝑘𝑘(𝑑𝑑3) = 1
2��𝑥𝑥31
∗2+𝑥𝑥32
∗2+𝑥𝑥33
∗2
�𝑤𝑤31
2+𝑤𝑤32
2+𝑤𝑤33
2+ �1−�(𝑤𝑤31−𝑥𝑥31
∗)2+(𝑤𝑤32−𝑥𝑥32
∗)2+(𝑤𝑤33−𝑥𝑥33
∗)2
𝑤𝑤31
2+𝑤𝑤32
2+𝑤𝑤33
2�� (2)-3
𝑥𝑥∗ s ands o he coe icien alues om PCA. These o mulas implies ha each
dimensions o he ESG pilla s is calcula ed om he a i hme ic mean (1/2) be ween
he mos ideal sco e (1 poin ) and he sco e o he wo s si ua ion o i ems o ESG
466 Jong-Hee Kim
ⓒ Ko ea Ins i u e o In e na ional Economic Policy
pilla s. And i is possible o calcula e a comp ehensi e ESG index companies (IESG)
in each o coun ies.
𝐼𝐼𝐸𝐸𝑆𝑆𝐺𝐺𝑖𝑖𝑘𝑘= 1 −�(1−𝐸𝐸𝑖𝑖𝑘𝑘(𝑑𝑑1))2+(1−𝑆𝑆𝑖𝑖𝑘𝑘(𝑑𝑑2))2+(1−𝐺𝐺𝑖𝑖𝑘𝑘(𝑑𝑑3))2
√3 (3)
Using he abo e o mula, i is possible o calcula e IESG o companies in each
coun y, wi h alues anging om 0 o 1. I implies ha as he company’s ESG
pe o mance inc eases, he alues become close o 1. This index o ma is sui able o
his esea ch because i e lec s he weigh o he speci ic ac o s ha comp ise ESG,
and also allows o easy compa ison o ESG pe o mance be ween coun ies.
Now ha he companies’ ESG pe o mance has been calcula ed, he ac o s ha
a ec ESG pe o mance a e able o be in es iga ed om he nex o mula.
𝐼𝐼𝐸𝐸𝑆𝑆𝐺𝐺𝑖𝑖,𝑡𝑡
𝑘𝑘=𝛼𝛼0+𝛼𝛼1∆𝑦𝑦𝑡𝑡𝑘𝑘+𝛼𝛼2∆𝑙𝑙𝑡𝑡𝑘𝑘+𝛼𝛼3∆𝐼𝐼𝑡𝑡𝑘𝑘+𝛼𝛼4∆𝑖𝑖𝑡𝑡𝑘𝑘 + 𝛼𝛼5∆𝐹𝐹𝐹𝐹𝐼𝐼𝑡𝑡𝑘𝑘+𝛼𝛼6∆𝑦𝑦𝑦𝑦𝑡𝑡𝑘𝑘
+ 𝛼𝛼7∆𝑃𝑃𝐹𝐹𝑡𝑡𝑘𝑘+𝛼𝛼8∆𝑟𝑟𝑡𝑡𝑘𝑘+𝛼𝛼9∆𝐶𝐶𝐶𝐶𝑡𝑡𝑘𝑘+𝛼𝛼10∆𝑅𝑅𝑅𝑅𝑡𝑡𝑘𝑘+𝛼𝛼11∆𝐺𝐺𝐸𝐸𝑡𝑡𝑘𝑘+𝛼𝛼12∆𝑉𝑉𝑉𝑉𝑡𝑡𝑘𝑘
+ 𝑉𝑉𝑖𝑖+𝐵𝐵𝑡𝑡+𝜖𝜖𝑖𝑖,𝑡𝑡
𝑘𝑘 (4)
The a iables ha a e conside ed a e he coun y’s economy and policies. In his
o mula, 𝑘𝑘 ep esen s coun y, 𝑡𝑡 ep esen s ime, and 𝑖𝑖 ep esen s i m espec i ely.
The i s ou a iables a e conside ed economic si ua ion o he coun y, ∆𝑦𝑦, ∆𝑙𝑙,
∆𝐼𝐼, and ∆𝑖𝑖 a e he g ow h a e o GDP pe capi a, labo o ce pa icipa ion a e,
indus y, alue added o GDP a io, and in e es a e espec i ely. The second ou
a iables a e he ones wi h he inancial ma ke s. ∆𝐹𝐹𝐹𝐹𝐼𝐼 ∆𝑦𝑦, ∆𝑃𝑃𝐹𝐹, and ∆𝑟𝑟 s and o
he g ow h a e o o eign di ec in es men , bank s abili y, pension und asse s o GDP
a io, and s ock ma ke e u n a e espec i ely. The las ou a iable a e conside ed
o he policy and ins i u ional en i onmen o he coun y. ∆𝐶𝐶𝐶𝐶, ∆𝑅𝑅𝑅𝑅, ∆𝐺𝐺𝐸𝐸, and
∆𝑉𝑉𝑉𝑉 a e he le el o co up ion con ol, ule o law, go e nmen e ec i eness, and
ci izens’ oice and accoun abili y espec i ely. And 𝑉𝑉𝑖𝑖 and 𝐵𝐵𝑡𝑡 a e each ixed e ec
models and accoun o he “ i m” dummy a iable and “yea ” dummy a iable.
Th ough hese equa ions, i is possible o analyze he how he economy and policy
a iables o each coun y a ec indi idual i ms’ ESG pe o mance.
Secondly, in addi ion o he analysis o he ESG pe o mance o companies
acco ding o he indi idual cha ac e is ics o each coun y, his s udy applies he
A S udy on he Role o Economic and Ins i u ional En i onmen on he Co po a e Responsibili y Pe o mance and i s Synch oniza ion
473
ⓒ 2024 Eas Asian Economic Re iew
acco ding o egula ions shows he highes alue. The lowes i ems in each h ee pilla s
a e en i onmen al imp o emen capabili y o he En i onmen (E) pilla , basic human
igh s o he Social (S) pilla , and co po a e social esponsibili y o he Co po a e
Go e nance (G) pilla espec i ely.
The ollowing able shows he a e age alues o companies’ ESG sco es in
indi idual coun ies.
Table 3. Desc ip i e S a is ics o he Va iables: ESG by Coun y Classi ica ion
Coun y Companies
ESG
En i onmen
(E)
Social (S)
Co po a e
Go e nance (G)
Ad anced
Economies
Aus alia
280
38.40
25.92
38.84
50.11
F ance
86
65.63
71.43
70.26
54.30
Ge many
85
60.06
57.83
63.56
56.17
Japan
407
45.29
47.98
39.35
48.91
Sweden
59
60.06
59.16
64.29
55.61
Swi ze land
65
54.42
51.54
56.45
54.45
Uni ed Kingdom
297
52.07
46.92
53.64
54.79
Uni ed S a es
1,287
45.40
33.16
47.76
52.25
Eme ging
Ma ke s
China
97
37.93
35.74
29.92
52.38
Hong Kong
58
47.33
47.12
45.71
50.73
India
97
49.73
42.00
54.05
49.71
Indonesia
38
47.11
34.17
52.01
50.71
Malaysia
51
45.00
34.99
47.36
50.37
Singapo e
37
43.02
37.17
42.46
49.57
Sou h Ko ea
116
47.76
46.40
45.94
50.60
Thailand
34
56.54
51.63
62.92
51.72
No e: A e age alues om 2011-2022.
Among he coun ies in ad anced economies, he a e age ESG pe o mance o 86
companies in F ance is 65.63 which is he highes alue, while 38.40 poin o 280
companies in Aus alia is he lowes . The a e age ESG pe o mance o 86 companies
in F ance shows he highes alue in he i ems o he En i onmen (E) pilla and Social
(S) pilla , while Aus alia’s 280 companies shows he lowes . Howe e , he i ems o
Co po a e Go e nance (G) pilla shows di e en pa e n. The alue o 85 companies
in Ge many is he highes , while i shows he lowes in 407 companies o Japan.
474 Jong-Hee Kim
ⓒ Ko ea Ins i u e o In e na ional Economic Policy
In he case o eme ging ma ke s, he a e age ESG pe o mance o 34 companies in
Thailand is 56.54 which is he highes alue, while 37.93 poin o 97 companies in
China is he lowes . In he case o Chinese companies, he alues o En i onmen (E)
pilla and Social (S) pilla a e he lowes , while he alue o Co po a e Go e nance (G)
pilla is he highes . In he case o 34 companies in Thailand, hey ha e he highes
alue in wo pilla s, En i onmen (E) and Social (S) pilla . And 97 companies in India
shows he lowes alue o Co po a e Go e nance (G) pilla .
Ⅳ. Empi ical Resul s
The i s s ep o analyze he de e minan s o ESG pe o mance o companies in 43
coun ies is he es ima ion o in eg a ed ESG index (IESG). Hence, based on he alue
ega ding companies ESG, his s udy calcula es all pa ame e s o he equa ions 2 and
3 o es ima e IESG. Table below epo s he esul s o he pa ame e s es ima ion.
Table 4. Resul s o Pa ame e s Es ima ions
E
Ad anced
Economies
Eme ging
Ma ke s
S
Ad anced
Economies
Eme ging
Ma ke s
G
Ad anced
Economies
Eme ging
Ma ke s
𝑥𝑥11
0.510
(0.917)
0.514
(0.900)
𝑥𝑥21
0.450
(0.818)
0.461
(0.864)
𝑥𝑥31
0.569
(0.879)
0.591
(0.899)
𝑥𝑥12
0.510
(0.918)
0.517
(0.905)
𝑥𝑥22
0.437
(0.794)
0.415
(0.778)
𝑥𝑥32
0.347
(0.536)
0.308
(0.468)
𝑥𝑥13
0.420
(0.756)
0.393
(0.688)
𝑥𝑥23
0.386
(0.701)
0.417
(0.782)
𝑥𝑥33
0.384
(0.594)
0.363
(0.551)
𝑥𝑥24
0.396
(0.719)
0.399
(0.748)
𝑤𝑤11
0.283
0.293
𝑤𝑤21
0.248
0.246
𝑤𝑤31
0.368
0.380
𝑤𝑤12
0.283
0.295
𝑤𝑤22
0.241
0.221
𝑤𝑤32
0.224
0.193
𝑤𝑤13
0.233
0.224
𝑤𝑤23
0.213
0.222
𝑤𝑤33
0.249
0.239
𝑤𝑤24
0.218
0.213
No e: 𝑥𝑥 s ands o coe icien o Fac o , 𝑤𝑤 s ands o weigh alue. Fac o s loadings a e gi en in
pa en heses. This is he esul s om calcula ion o coun ies in ad anced economies and eme ging
ma ke s. The eal alue o all pa ame e s a e calcula ed by he es ima ion o each coun y’s PCA,
bu he epo s o es ima ion esul s o 16 cases a e omi ed.
A S udy on he Role o Economic and Ins i u ional En i onmen on he Co po a e Responsibili y Pe o mance and i s Synch oniza ion
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ⓒ 2024 Eas Asian Economic Re iew
In gene al, e e y componen o wo pilla s, he En i onmen (E) and Social (S) is
ai ly dis ibu ed. The e is no big di e ence o coe icien s o wo pilla s be ween
ad ance economies and eme ging ma ke s, hus, he weigh ed alues a e ai ly
dis ibu ed. Howe e , he e is a signi ican di e ence in he case o he o he pilla ,
Co po a e Go e nance (G) whose weigh ed alue o 𝑤𝑤31 is ela i ely high, ha is
s ockholde s’ managemen . And he e a e di e ences o coe icien s and weigh ed
alues o Co po a e Go e nance (G) be ween wo g oups.
Based on he in es iga ed da a ega ding companies’ ESG sco e, his pape es ima es
he in eg a ed ESG index (IESG) o companies in wo g oups om 16 coun ies using
equa ion 1 and 2, he ollowing able shows he esul s o his calcula ion.
Table 5. Es ima ion Resul s o IESG
ESG En i onmen (E) Social (S)
Co po a e
Go e nance (G)
Ad anced Economies
(2,566 companies)
0.453 0.412 0.493 0.526
Eme ging Ma ke s
(528 companies)
0.399 0.359 0.398 0.439
No e: A e age alues om 2011-2022.
The esul o calcula ing 2,566 companies in ad anced economies shows ha he
a e age in eg a ed ESG index o e 12 yea s is 0.453, a alue ha does no exceed 0.5.
Among all pilla s o he o En i onmen (E), Social (S), and Co po a e Go e nance
(G), pe o mance in En i onmen (E) pilla is ela i ely low. Howe e he
pe o mance in Co po a e Go e nance (G) pilla is mo e han 0.5. In he case o 528
companies in eme ging ma ke s, he pe o mance o IESG is 0.399, a alue ha less
han he eme ging ma ke s’ companies a e less han 0.5 in all h ee a eas, and he
calcula ed alues show esul s in he o de o Co po a e Go e nance (G) > Social (S)
> En i onmen (E).
The ollowing igu e shows he end o ac ual ESG sco e and he es ima ed Index
(IESG) o e he pas decade.
476 Jong-Hee Kim
ⓒ Ko ea Ins i u e o In e na ional Economic Policy
Figu e1. ESG Index (IESG) T end
Companies in ad anced economies ha e been main aining a g adually inc easing
g ow h pa e n, while he companies in eme ging ma ke s ha e been apidly inc easing
hei pe o mance. In he case o companies in ad anced economies, he ESG
pe o mance is no signi ican ly changed by 2015, hen i g ows g adually beginning
in 2016. The companies’ ESG pe o mance in eme ging ma ke s o iginally shows a
igu e ha is signi ican ly low compa ed o he companies’ pe o mance in ad anced
economies. Howe e , i g ows apidly beginning in 2016, and by 2022 shows simila
pe o mance o ha o he companies in ad anced economies. I is in e es ing o no e
ha he ESG pe o mance in bo h has imp o ed since 2016, which has been simila
alue be ween bo h g oups.
As desc ibed abo e, using he in eg a ed ESG index, which is calcula ed om he
ac ual sco e o ESG, his pape es ima es he ela ionship be ween ESG pe o mance
o indi idual companies and he economic, inancial, and ins i u ional a iables o he
coun y. The ollowing able shows he esul s o his es ima ion by using he equa ion 4.
Fi s , he g ow h a e o GDP pe capi a (∆𝑦𝑦𝑖𝑖,𝑡𝑡) has a posi i e e ec on he ESG
pe o mance o 528 companies in eme ging ma ke s, while i has no signi icance in
2,566 companies in ad anced economies. The g ow h a e o labo o ce pa icipa ion
a e (∆𝑙𝑙𝑖𝑖,𝑡𝑡) ha e a posi i e e ec on he ESG pe o mance in bo h g oups, bu he
g ow h a e o indus y, alue added o GDP a io (∆𝐼𝐼𝑖𝑖,𝑡𝑡) has a posi i e signi icance
wi h he ESG pe o mance only in he companies in eme ging ma ke s. In he case o
0.425
0.513
0.314
0.488
0.200
0.250
0.300
0.350
0.400
0.450
0.500
0.550
0.600
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Ad anced Economies Eme ging Ma ke s
A S udy on he Role o Economic and Ins i u ional En i onmen on he Co po a e Responsibili y Pe o mance and i s Synch oniza ion
477
ⓒ 2024 Eas Asian Economic Re iew
in e es a e (∆𝑖𝑖𝑖𝑖,𝑡𝑡), i s signi icance is weak in bo h g oups. The di e ence signi icance
o he g ow h a e o GDP pe capi a in bo h g oups can be in e p e ed is ha i a
company is in he de elopmen s age, in es men esul ing om economic g ow h in
he coun y can posi i ely a ec ESG. Howe e , i he company is in a ma u e s a e o
Table 6. Es ima ion Resul s acco ding o Companies o Fac o s De e mining ESG
Dep. V.
∆𝐼𝐼𝐸𝐸𝑆𝑆𝐺𝐺𝑖𝑖,𝑡𝑡
𝑘𝑘
Classi ica ion
Ad anced Economies
(2,566 companies)
Eme ging Ma ke s
(528 companies)
∆𝑦𝑦𝑖𝑖,𝑡𝑡
0.014
(0.002)
0.035
(0.046)***
∆𝑙𝑙𝑖𝑖,𝑡𝑡
0.036
(0.015)***
0.067
(0.017)***
∆𝐼𝐼𝑖𝑖,𝑡𝑡
0.003
(0.008)
0.061
(0.014)***
∆𝑖𝑖𝑖𝑖,𝑡𝑡
0.043
(0.014)*
0.028
(0.014)*
∆𝐹𝐹𝐹𝐹𝐼𝐼𝑖𝑖,𝑡𝑡
0.003
(0.001)
0.077
(0.027)***
∆𝑦𝑦𝑖𝑖,𝑡𝑡
0.029
(0.037)
0.139
(0.010)***
∆𝑃𝑃𝐹𝐹𝑖𝑖,𝑡𝑡
0.206
(0.009)***
0.149
(0.009)
∆𝑟𝑟𝑖𝑖,𝑡𝑡
0.081
(0.033)***
0.071
(0.062)
∆𝐶𝐶𝐶𝐶𝑖𝑖,𝑡𝑡
0.087
(0.083)**
0.495
(0.155)***
∆𝑅𝑅𝑅𝑅𝑖𝑖,𝑡𝑡
0.225
(0.077)***
0.418
(0.183)***
∆𝐺𝐺𝐸𝐸𝑖𝑖,𝑡𝑡
0.218
(0.064)***
0.167
(0.121)
∆𝑉𝑉𝑉𝑉𝑖𝑖,𝑡𝑡
0.331
(0.119)***
0.642
(0.143)***
C
0.159
(0.065)***
0.180
(0.026)***
Panel Obs.
24,061
5,310
R-squa ed
0.144
0.157
No es: Panel OLS ( ixed e ec ). S anda d e o s a e gi en in pa en heses. + signi ican a 10 pe cen , *
signi ican a 5 pe cen , ** signi ican a 1 pe cen .
478 Jong-Hee Kim
ⓒ Ko ea Ins i u e o In e na ional Economic Policy
de elopmen , in es men om economic g ow h does no necessa ily ha e a posi i e
e ec on ESG.
In he case o inancial a iables, he size o o eign di ec in es men (∆𝐹𝐹𝐹𝐹𝐼𝐼𝑖𝑖,𝑡𝑡) and
bank z-sco e (∆𝑦𝑦𝑖𝑖,𝑡𝑡) which is ela ed o he bank’s s abili y ha e a posi i e e ec on
ESG pe o mance o companies in eme ging ma ke s. The e a e no signi icances in
he companies o ad anced economies. On he con a y, he g ow h a e o pension
und asse s o GDP a io (∆𝑃𝑃𝐹𝐹𝑖𝑖,𝑡𝑡) and s ock ma ke e u n a e (∆𝑟𝑟𝑖𝑖,𝑡𝑡) ha e a s ong
posi i e e ec on he ESG pe o mance o he companies in ad anced economies,
while hey ha e no signi icances in he companies in eme ging ma ke .
The posi i e ela ionship be ween ESG and o eign di ec in es men in companies
o eme ging ma ke s can also be in e p e ed in connec ion wi h he inc ease in o eign
sha e owne ship o he company. Fo example, i he sha e owne ship by o eigne s in
a pa icula company inc eases, he go e nance s uc u e o he company, ha is, he
anspa ency o he boa d o di ec o s and he p o ec ion o sha eholde igh s, can be
s eng hened.
And he s ong posi i e impac o he g ow h a e o pension und asse s o GDP
a io on he ESG pe o mance o companies in ad anced economies, which con ains
ad anced companies o social esponsibili y implies ha ins i u ional in es o s can
play an impo an ole o in he social esponsibili y in es men .
In compa ison o his, he go e nmen ins i u ional indexes show a clea signi icance
in bo h g oups. All ou a iables such as he g ow h a e o co up ion con ol (∆𝐶𝐶𝐶𝐶𝑖𝑖,𝑡𝑡),
ule o law (∆𝑅𝑅𝑅𝑅𝑖𝑖,𝑡𝑡), go e nmen e ec i eness (∆𝐺𝐺𝐸𝐸𝑖𝑖,𝑡𝑡), and ci izens’ oice and
accoun abili y (∆𝑉𝑉𝑉𝑉𝑖𝑖,𝑡𝑡) ha e a posi i e e ec on he ESG pe o mance o companies
in bo h. Among hem, he signi icance o ci izens’ oice and accoun abili y is he
highes .
A poin o in e es is he companies’ ESG pe o mance and i s ela ionship wi h he
ins i u ional a iables which con ain in o ma ion abou he go e nmen ’s policies and
ins i u ions. They ha e a pa icula ly la ge posi i e e ec on he companies in
eme ging ma ke s.
The nex s ep is o he analysis o classi ying g ades o ESG. As i men ioned ea lie
in pa o model explana ion, in his pape , a o al o 3,094 companies ESG
pe o mance is compa ed o e he pe iod o 12 yea s, om 2011 o 2022. Each
company is classi ied acco ding o he deg ee o he inc ease in ESG pe o mance, and
he cha ac e is ics o ESG pe o mance we e hen compa ed wi h his. The ollowing
able shows he cha ac e is ics o he companies classi ied in his way.
A S udy on he Role o Economic and Ins i u ional En i onmen on he Co po a e Responsibili y Pe o mance and i s Synch oniza ion
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ⓒ 2024 Eas Asian Economic Re iew
Table 7. Classi ying Resul s acco ding o he Companies’ A e age ESG G ade
Coun y
A g ade
B g ade
C g ade
D g ade
Ad anced Economies
(2,566 companies)
214 companies
(8.3%)
844 companies
(32.9%)
1,140 companies
(44.4%)
358 companies
(14.0%)
Aus alia
15
58
132
75
F ance
28
47
11
0
Ge many
24
33
22
6
Japan
21
170
139
77
Sweden
15
28
13
3
Swi ze land
12
16
21
6
Uni ed Kingdom
33
128
114
22
Uni ed S a es
66
364
688
169
Eme ging Ma ke s
(528 companies)
35 companies
(6.6%)
193 companies
(36.6%)
230 companies
(43.6%)
70 companies
(13.3%)
China
0
19
63
15
Hong Kong
1
25
31
1
India
9
36
49
3
Indonesia
2
17
14
5
Malaysia
1
17
28
5
Singapo e
1
14
14
8
Sou h Ko ea
18
45
21
32
Thailand
3
20
10
1
No e: A e age alues om 2011-2022.
In he case o 2,566 companies in ad anced economies, 214 companies show an
a e age A g ade o e he pe iod o o e he pe iod o 12 yea s, om 2011 o 2022, and
i s a io is abou 8.3%. And 358 companies ha e an a e age D g ade (14.0%) o e he
same pe iod, so ha he a io o an a e age C o D g ades is abou 58.4%. The simila
esul is ound in he 528 companies in eme ging ma ke s. 35 companies (6.6%)
eco ds an a e age A g ade o e he pe iod o 12 yea s, om 2011 o 2022, while abou
13.3% (70 companies) o he en i e companies eco ds D g ade o e he same pe iod.
As a esul , 300 companies show an a e age C o D g ade, which is 56.8% o whole
companies in eme ging ma ke s.
The ollowing igu e shows he ends o he companies’ a e age ESG g ade in bo h
g oups.
480 Jong-Hee Kim
ⓒ Ko ea Ins i u e o In e na ional Economic Policy
Figu e 2. ESG Index (IESG) T end by Classi ying Companies’ a e age ESG G ades
G ade A
G ade B
G ade C
G ade D
The end in each g ade shows di e en pa e n be ween wo g oups. In he case o he
companies in g ade A, he companies’ ESG pe o mance in ad anced economies
o iginally shows a igu e ha is ela i ely low compa ed o he companies’ pe o mance
in eme ging ma ke s. Howe e i g ows g adually, and by 2022 shows a highe
pe o mance han ha o he companies in eme ging ma ke s. This end also appea s in
he pe o mances o he companies in g ade B. The companies’ pe o mance in
ad anced economies ha e been main aining a g adually inc easing g ow h pa e n, and
by 2022 shows a simila pe o mance o ha o he companies in eme ging ma ke s.
In he case o he companies in g ade D, he end shows a pa icula ly opposi e
pa e n o he p e ious ends in g ade A and B. The companies’ pe o mance in
eme ging ma ke s shows a igu e ha is ela i ely low compa ed o he companies’
pe o mance in ad anced economies. Howe e , i has imp o ed signi ican ly since
2016, which has ecen ly been highe han ha o he companies in ad anced
economies. In he case o he companies in g ade C, he companies in eme ging
ma ke s ha e been apidly inc easing hei ESG pe o mance since he beginning in
2011, and by 2022 shows a pa icula highe han ha o he companies in ad anced
economies.
A S udy on he Role o Economic and Ins i u ional En i onmen on he Co po a e Responsibili y Pe o mance and i s Synch oniza ion
481
ⓒ 2024 Eas Asian Economic Re iew
Using he abo e me hod o classi ica ion, he ela ionship be ween companies’ ESG
pe o mance and i s de e minan s is hen es ima ed. The esul s o hese es ima ions
a e displayed in he ollowing able.
Table 8. Es ima ion Resul s o Deciding Fac o s o ESG by Classi ying Companies’
A e age ESG G ade
Dep. V.
∆𝐼𝐼𝐸𝐸𝑆𝑆𝐺𝐺
𝑖𝑖,𝑡𝑡
𝑘𝑘
Classi ica ion
Ad anced Economies
(2,566 companies)
Eme ging Ma ke s
(528 companies)
G ade
A g ade
(214)
B g ade
(844)
C g ade
(1,140)
D g ade
(358)
A g ade
(35)
B g ade
(193)
C g ade
(230)
D g ade
(70)
∆𝑦𝑦
𝑖𝑖,𝑡𝑡
0.019
(0.006)
-0.013
(0.003)
0.019
(0.038)
-0.010
(0.005)*
0.014
(0.016)
0.003
(0.008)***
0.049
(0.007)***
0.017
(0.012)***
∆𝑙𝑙
𝑖𝑖,𝑡𝑡
0.060
(0.043)
0.055
(0.026)
0.081
(0.025)***
0.069
(0.030)**
0.031
(0.070)***
0.085
(0.030)***
0.040
(0.025)***
0.083
(0.042)***
∆𝐼𝐼
𝑖𝑖,𝑡𝑡
0.059
(0.031)*
0.043
(0.016)***
0.097
(0.013)
0.293
(0.014)**
0.074
(0.054)***
0.058
(0.025)**
0.066
(0.023)***
0.012
(0.030)***
∆𝑖𝑖
𝑖𝑖,𝑡𝑡
0.014
(0.040)
0.097
(0.025)***
0.047
(0.023)**
0.048
(0.032)
0.092
(0.059)*
0.018
(0.025)
0.029
(0.021)***
0.043
(0.032)
∆𝐹𝐹𝐹𝐹𝐼𝐼
𝑖𝑖,𝑡𝑡
-0.002
(0.002)
-0.007
(0.002)
0.063
(0.019)
-0.008
(0.003)
0.004
(0.015)
0.037
(0.004)***
0.107
(0.004)***
0.094
(0.009)***
∆𝑦𝑦
𝑖𝑖,𝑡𝑡
0.011
(0.009)
0.010
(0.006)
0.040
(0.064)
0.039
(0.010)***
0.038
(0.049)
0.019
(0.015)***
0.095
(0.015)***
0.012
(0.021)***
∆𝑃𝑃𝐹𝐹
𝑖𝑖,𝑡𝑡
0.053
(0.030)***
0.034
(0.016)**
0.072
(0.014)***
0.156
(0.018)***
-0.020
(0.043)
0.019
(0.015)
0.012
(0.014)
0.015
(0.024)
∆𝑟𝑟
𝑖𝑖,𝑡𝑡
0.029
(0.010)***
0.036
(0.058)***
0.006
(0.005)
-0.002
(0.006)
0.002
(0.003)
0.008
(0.002)
0.012
(0.009)
-0.002
(0.012)*
∆𝐶𝐶𝐶𝐶
𝑖𝑖,𝑡𝑡
0.248
(0.236)***
0.171
(0.145)***
0.263
(0.138)***
0.500
(0.186)***
0.054
(0.055)***
0.376
(0.273)***
0.486
(0.243)***
0.639
(0.314)***
∆𝑅𝑅𝑅𝑅
𝑖𝑖,𝑡𝑡
0.055
(0.022)
0.117
(0.132)***
0.262
(0.129)***
0.270
(0.186)*
0.087
(0.054)***
0.410
(0.308)***
0.425
(0.312)***
0.398
(0.347)***
∆𝐺𝐺𝐸𝐸
𝑖𝑖,𝑡𝑡
0.325
(0.214)***
0.011
(0.011)
0.366
(0.106)***
0.377
(0.126)***
0.408
(0.384)***
0.339
(0.210)***
0.050
(0.192)
0.546
(0.271)***
∆𝑉𝑉𝑉𝑉
𝑖𝑖,𝑡𝑡
0.372
(0.365)***
0.349
(0.219)***
0.376
(0.187)***
0.368
(0.234)***
0.378
(0.430)***
0.419
(0.228)***
0.475
(0.230)***
0.540
(0.375)***
C
0.097
(0.020)***
0.173
(0.011)***
0.190
(0.010)***
0.053
(0.135)***
0.103
(0.092)
0.163
(0.042)***
0.219
(0.040)***
0.138
(0.066)**
Panel Obs.
2,308
8,643
10,035
3,075
371
1,971
2,301
667
R-squa ed
0.128
0.123
0.227
0.147
0.385
0.171
0.259
0.244
No es: Panel OLS ( ixed e ec ). S anda d e o s a e gi en in pa en heses. + signi ican a 10 pe cen , *
signi ican a 5 pe cen , ** signi ican a 1 pe cen .
482 Jong-Hee Kim
ⓒ Ko ea Ins i u e o In e na ional Economic Policy
The signi icance o companies’ ESG pe o mance and i s ela ionship wi h he
coun y’s economy and ins i u ional en i onmen can be seen p ima ily in wo g oups
o companies. The e a e companies ha ha e shown a g ade A in hei ESG
pe o mance, including hose companies ha ha e shown a g ade B in hei alues.
In he case o he companies in eme ging ma ke s, he posi i e ela ionship be ween
GDP pe capi a (∆𝑦𝑦𝑖𝑖,𝑡𝑡) and ESG can be seen in companies ha ha e shown a g ade D,
while he signi icance is ela i e weak in he companies in ad anced economies. The
posi i e signi icances o labo o ce pa icipa ion a e (∆𝑙𝑙𝑖𝑖,𝑡𝑡) and indus y, alue added
o GDP a io (∆𝐼𝐼𝑖𝑖,𝑡𝑡) wi h ESG a e ound in he companies ha ha e shown a g ade A
and D in eme ging ma ke s. Howe e i is only ound in he companies ha ha e
shown a g ade D in ad anced economies.
As p edic ed, he clea di e ence be ween wo g oups is ound in inancial a iables,
o eign di ec in es men (∆𝐹𝐹𝐹𝐹𝐼𝐼𝑖𝑖,𝑡𝑡), pension und asse s o GDP a io (∆𝑃𝑃𝐹𝐹𝑖𝑖,𝑡𝑡) and
s ock ma ke e u n a e (∆𝑟𝑟𝑖𝑖,𝑡𝑡). In he case o o eign di ec in es men (∆𝐹𝐹𝐹𝐹𝐼𝐼𝑖𝑖,𝑡𝑡), i is
ound ha ESG pe o mance imp o ed in companies ha showed a g ade B, C, and D
in eme ging ma ke s, while he e is no signi icance in he companies in ad anced
economies. On he con a y, he posi i e signi icances o pension und asse s o GDP
a io (∆𝑃𝑃𝐹𝐹𝑖𝑖,𝑡𝑡) and s ock ma ke e u n a e (∆𝑟𝑟𝑖𝑖,𝑡𝑡) a e ound in companies o ad anced
economies. Pension und asse s o GDP a io (∆𝑃𝑃𝐹𝐹𝑖𝑖,𝑡𝑡) has a s ong posi i e e ec on
he companies’ ESG pe o mance o all g ades, while he e is no signi icance in he
companies in eme ging ma ke s. And in he case o s ock ma ke e u n a e (∆𝑟𝑟𝑖𝑖,𝑡𝑡),
he e is a posi i e ela ionship ound only be ween companies wi h a g ade A and B.
The ins i u ional Indexes, which e e o go e nmen policy and he coun y’s
ins i u ional en i onmen , show a posi i e ela ionship wi h all g ades o companies’
ESG pe o mance in bo h g oup. Howe e no signi icance is ound in he ule o law
(∆𝑅𝑅𝑅𝑅𝑖𝑖,𝑡𝑡) o he companies wi h A, and in he go e nmen e ec i eness (∆𝐺𝐺𝐸𝐸𝑖𝑖,𝑡𝑡) o he
companies wi h B in ad anced economies. Be ween wo g oups, one can see ha he
posi i e ela ionship is s onge in he companies in eme ging ma ke s. Speci ically,
he signi icances o co up ion con ol (∆𝐶𝐶𝐶𝐶𝑖𝑖,𝑡𝑡) and ci izens’ oice and accoun abili y
(∆𝑉𝑉𝑉𝑉𝑖𝑖,𝑡𝑡) a e s ill s ong in he companies in eme ging ma ke s. Among hese a iables,
one can see ha he posi i e ela ionship is s onge in companies wi h g ades ha
shows a ela i e low.
This esul can be in e p e ed in a ious ways, bu in connec ion wi h he p e ious
esul s, i can be said ha companies whose ESG pe o mance has declined signi ican ly
A S udy on he Role o Economic and Ins i u ional En i onmen on he Co po a e Responsibili y Pe o mance and i s Synch oniza ion
489
ⓒ 2024 Eas Asian Economic Re iew
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Fi s e sion ecei ed on Decembe 9, 2024
Pee - e iewed e sion ecei ed on Decembe 21, 2024
Final e sion accep ed on Decembe 23, 2024
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