Does Sustainable Corporate Governance Enhance Accounting Practice? Evidence from the Korean Market
Abstract
:1. Introduction
2. Institutional Background and Related Literature
2.1. “Passive” Institutional Monitoring Channel and the Chaebol-Dominated Korean Market
2.2. Other Related Studies
3. Sample and Key Variables
4. Results
5. Conclusions
Author Contributions
Funding
Conflicts of Interest
Appendix A
Variable | Definitions |
---|---|
SIZE | Natural logarithm of the total assets of firm i in year t |
LEV | Total debt divided by the market value of equity (common shares outstanding multiplied by the stock price) for firm i in year t |
ROA | Earnings before interest and tax (EBIT) divided by total assets for firm i in year t |
MB | Sum of the market value of equity, long-term debt, and short-term debt divided by total assets for firm i in year t |
Sales_G | Sales in year t divided by sales in year t-1 minus 1 for firm i |
STD_Sales | Standard deviation of sales scaled by total assets for firm i during years t-4 to t |
STD_OCF | Standard deviation of operating cash flows scaled by total assets for firm i during years t-4 to t |
Firm_Age | Natural logarithm of the number of years since firm i was established |
RND_Exp | R&D expenditures divided by sales for firm i in year t |
Index_D | Dummy variable equal to 1 for a firm listed on the KOSPI and equal to 0 otherwise |
Appendix B
KNPS_BIO | Persistence | Value Relevance | Timeliness | SIZE | LEV | ROA | MB | Sales_G | STD_Sales | STD_OCF | Firm_Age | RND_Exp | Index_D | ||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
KNPS_BIO | 1 | ||||||||||||||
Persistence | 0.037 *** | 1 | |||||||||||||
[<0.0001] | |||||||||||||||
Value Relevanc | 0.068 *** | 0.017 ** | 1 | ||||||||||||
[<0.0001] | [0.0373] | ||||||||||||||
Timeliness | 0.028 *** | 0.015 * | 0.030 *** | 1 | |||||||||||
[0.0008] | [0.0602] | [0.0003] | |||||||||||||
SIZE | 0.407 *** | 0.074 *** | 0.128 *** | 0.032 *** | 1 | ||||||||||
[<0.0001] | [<0.0001] | [<0.0001] | [0.0006] | ||||||||||||
LEV | −0.001 | 0.002 | −0.037 *** | 0.012 | 0.272 *** | 1 | |||||||||
[0.8459] | [0.7923] | [<0.0001] | [0.1892] | [<0.0001] | |||||||||||
ROA | 0.089 *** | −0.047 *** | 0.082 *** | 0.017 * | 0.188*** | −0.229 *** | 1 | ||||||||
[<0.0001] | [<.0001] | [<0.0001] | [0.0685] | [<0.0001] | [<0.0001] | ||||||||||
MB | 0.059 *** | 0.028 *** | −0.212 *** | −0.006 | −0.192 *** | −0.337 *** | −0.037 *** | 1 | |||||||
[<0.0001] | [0.0024] | [<0.0001] | [0.4808] | [<0.0001] | [<0.0001] | [<0.0001] | |||||||||
Sales_G | −0.010 | −0.009 | 0.002 | 0.005 | 0.015 | 0.029 *** | 0.008 | −0.007 | 1 | ||||||
[0.2723] | [0.3507] | [0.8177] | [0.5385] | [0.1047] | [0.0026] | [0.3988] | [0.4236] | ||||||||
STD_Sales | −0.027 *** | −0.003 | −0.090 *** | −0.012 | −0.122 *** | 0.088 *** | −0.108 *** | 0.048 *** | 0.076 *** | 1 | |||||
[0.0039] | [0.7283] | [<0.0001] | [0.1990] | [<0.0001] | [<0.0001] | [<0.0001] | [<0.0001] | [<0.0001] | |||||||
STD_OCF | −0.058 *** | −0.031 *** | −0.085 *** | −0.005 | −0.193 *** | 0.064 *** | −0.224 *** | 0.117 *** | 0.186 *** | 0.316 *** | 1 | ||||
[<0.0001] | [0.0007] | [<0.0001] | [0.5428] | [<0.0001] | [<0.0001] | [<0.0001] | [<0.0001] | [<0.0001] | [<0.0001] | ||||||
Firm_Age | 0.081 *** | 0.003 | 0.093 *** | 0.008 | 0.293 *** | 0.071 *** | 0.082 *** | −0.209 *** | −0.009 | −0.140 *** | −0.183 *** | 1 | |||
[<0.0001] | [0.6707] | [<0.0001] | [0.3564] | [<0.0001] | [<0.0001] | [<0.0001] | [<0.0001] | [0.3125] | [<0.0001] | [<0.0001] | |||||
RND_Exp | −0.008 | −0.014 | −0.033 *** | 0.004 | −0.093 *** | −0.098 *** | −0.084 *** | 0.213 *** | −0.009 | −0.005 | 0.039 *** | -0.162 *** | 1 | ||
[0.3676] | [0.1338] | [0.0004] | [0.6628] | [<0.0001] | [<0.0001] | [<0.0001] | [<0.0001] | [0.3043] | [0.5559] | [<0.0001] | [<0.0001] | ||||
Index_D | 0.363 | 0.053 *** | 0.048 *** | 0.021 ** | 0.583 *** | 0.027 *** | 0.095 *** | 0.131 *** | 0.019 ** | −0.092 *** | −0.068 *** | 0.116 *** | 0.024 ** | 1 | |
[<0.0001] | [<0.0001] | [<0.0001] | [0.0207] | [<0.0001] | [0.0031] | [<0.0001] | [<0.0001] | [0.0413] | [<0.0001] | [<0.0001] | [<0.0001] | [0.0102] |
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Variable | Mean | SD | 5th Percentile | 25th Percentile | Median | 75th Percentile | 95th Percentile |
---|---|---|---|---|---|---|---|
KNPS_BIO | 0.0711 | 0.0192 | 0.0503 | 0.0544 | 0.0660 | 0.0839 | 0.1084 |
Persistence | 0.1271 | 0.7306 | −0.6701 | −0.2270 | 0.0522 | 0.3902 | 1.1596 |
ValueRelevance | −0.1729 | 0.2961 | −0.8130 | −0.1902 | −0.0562 | −0.0112 | −0.0003 |
Timeliness | 0.1324 | 0.7870 | −1.4503 | −0.3276 | 0.3019 | 0.8177 | 0.9912 |
SIZE | 19.0863 | 1.5448 | 17.1432 | 18.0502 | 18.7619 | 19.8366 | 22.2368 |
LEV | 0.4654 | 0.2085 | 0.1348 | 0.3020 | 0.4703 | 0.6156 | 0.7946 |
ROA | 0.0011 | 0.2001 | −0.2004 | −0.0053 | 0.0260 | 0.0605 | 0.1290 |
MB | 492.5660 | 677.8555 | 63.3021 | 165.7285 | 310.0427 | 575.8016 | 1485.9900 |
Sales_G | 0.2474 | 4.7496 | −0.3267 | −0.0523 | 0.0598 | 0.1945 | 0.6852 |
STD_Sales | 0.1660 | 0.1814 | 0.0000 | 0.0654 | 0.1222 | 0.2122 | 0.4521 |
STD_OCF | 0.0644 | 0.0606 | 0.0000 | 0.0311 | 0.0523 | 0.0820 | 0.1552 |
Firm_Age | 3.2963 | 0.5539 | 2.3026 | 2.8904 | 3.4012 | 3.7136 | 4.0604 |
RND_Exp | 0.0130 | 0.0434 | 0.0000 | 0.0000 | 0.0011 | 0.0110 | 0.0598 |
Index_D | 0.1956 | 0.3967 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 1.0000 |
Panel A | Persistencet | ValueRelevancet | Timelinesst |
Intercept | 0.1168 ** | −0.2381 *** | 0.0530 |
(2.61) | (−7.32) | (1.16) | |
KNPS_BIOt-1 | 0.4572 ** | 0.3599 *** | 1.3165 ** |
(2.28) | (7.90) | (2.92) | |
SIZEt-1 | 0.0373 ** | 0.0125 * | 0.0412 ** |
(2.66) | (2.20) | (2.60) | |
LEVt-1 | −0.0093 | −0.0780 *** | 0.1192 |
(−0.28) | (−9.51) | (1.57) | |
ROAt-1 | 0.0820 ** | 0.0908 ** | 0.1061 ** |
(3.02) | (3.28) | (2.41) | |
MBt-1 | 0.0001 * | −0.0001 ** | 0.0001 |
(2.19) | (−2.56) | (0.21) | |
Sales_Gt-1 | −0.0058 | 0.0117 ** | −0.0202 |
(−0.25) | (2.66) | (−1.06) | |
STD_Salest-1 | −0.0208 * | −0.0235 *** | −0.0064 |
(−2.10) | (−7.68) | (−0.45) | |
STD_OCFt-1 | −0.3787 ** | −0.0372 | 0.2169 |
(−2.40) | (−0.49) | (0.75) | |
Firm_Aget-1 | −0.0102 | 0.0254 *** | −0.0053 |
(−0.72) | (4.50) | (−0.53) | |
RND_Expt-1 | −0.4145 *** | −0.3939 *** | 0.5583 |
(−10.45) | (−3.51) | (1.32) | |
Index_D | 0.0462 *** | 0.0244 * | 0.0005 |
(3.94) | (2.26) | (0.01) | |
Adjusted R2 | 0.0106 | 0.0418 | 0.0063 |
Observations | 1214 | 1214 | 1214 |
Panel B | Persistencet | ValueRelevancet | Timelinesst |
Intercept | 0.121 ** | −0.183 *** | 0.077 |
(2.22) | (−11.47) | (1.27) | |
KNPS_BIOt-1 | 0.821 ** | 0.429 *** | 1.273 *** |
(2.32) | (3.23) | (3.21) | |
SIZEt-1 | 0.037 *** | 0.013 *** | 0.040 *** |
(2.75) | (2.66) | (2.69) | |
LEVt-1 | −0.022 | −0.076 *** | 0.097 ** |
(−0.56) | (−5.20) | (2.23) | |
ROAt-1 | 0.083 ** | 0.087 *** | 0.089 ** |
(2.12) | (5.93) | (2.03) | |
MBt-1 | 0.001 *** | −0.001 *** | 0.001 |
(2.64) | (−5.54) | (0.98) | |
Sales_Gt-1 | −0.019 | 0.006 | −0.012 |
(−1.06) | (0.94) | (−0.58) | |
STD_Salest-1 | −0.018 * | −0.020 *** | −0.005 |
(−1.96) | (−5.94) | (−0.52) | |
STD_OCFt-1 | −0.349 *** | −0.031 | 0.240 * |
(−2.73) | (−0.64) | (1.68) | |
Firm_Aget-1 | −0.006 | 0.026 *** | −0.010 |
(−0.44) | (5.07) | (−0.65) | |
RND_Expt-1 | −0.374 * | −0.150 ** | 0.171 |
(−1.95) | (−2.08) | (0.80) | |
Index_D | 0.054 *** | 0.021 *** | 0.003 |
(2.72) | (2.77) | (0.13) | |
Adjusted R2 | 0.0069 | 0.0314 | 0.0025 |
Observations | 1214 | 1214 | 1214 |
Panel A | Persistencet | ValueRelevancet | Timelinesst | |||
Variable | Low Opacity | High Opacity | Low Opacity | High Opacity | Low Opacity | High Opacity |
Intercept | 0.1168 ** | 0.1141 *** | −1.0880*** | −0.2484*** | −1.8791*** | 0.0530 |
(2.61) | (5.78) | (−357.75) | (−7.32) | (−10.12) | (1.16) | |
KNPS_BIOt-1 | 0.4572 | 0.0760 *** | −0.0155 | 0.3599*** | 0.2510 | 1.3165** |
(0.58) | (3.61) | (−0.56) | (7.90) | (0.28) | (2.92) | |
SIZEt-1 | 0.0373 ** | −0.0053 *** | −0.0010 | 0.0125* | 0.5042*** | 0.0412** |
(2.66) | (−3.48) | (−0.57) | (2.20) | (10.76) | (2.60) | |
LEVt-1 | −0.0093 | 0.0255 *** | −0.0079** | −0.0780*** | −0.4658*** | 0.1192 |
(−0.28) | (4.57) | (−2.46) | (−9.51) | (−4.36) | (1.57) | |
ROAt-1 | 0.0820 ** | −0.0677 *** | 0.0064 | 0.0908** | 1.3482*** | 0.1061** |
(3.02) | (−6.95) | (1.41) | (3.28) | (8.69) | (2.41) | |
MBt-1 | 0.0001 * | 0.0001 *** | −0.0001 | −0.0001** | −0.0001*** | 0.0001 |
(2.19) | (8.39) | (−0.40) | (−2.56) | (−4.92) | (0.21) | |
Sales_Gt-1 | −0.0058 | 0.0001 | −0.0009 | 0.0117** | −0.1368** | −0.0202 |
(−0.25) | (0.03) | (−0.59) | (2.66) | (−2.50) | (−1.06) | |
STD_Salest-1 | −0.0208 * | 0.0095 *** | 0.0019** | −0.0235*** | −0.1900*** | −0.0064 |
(−2.10) | (6.08) | (2.86) | (−7.68) | (−4.01) | (−0.45) | |
STD_OCFt-1 | −0.3787 ** | 0.1569 *** | 0.0024 | −0.0372 | 2.3434*** | 0.2169 |
(−2.40) | (8.69) | (0.38) | (−0.49) | (3.44) | (0.75) | |
Firm_Aget-1 | −0.0102 | −0.0138 *** | −0.0032*** | 0.0254*** | 0.1483** | −0.0053 |
(−0.72) | (−4.35) | (−3.48) | (4.50) | (2.78) | (−0.53) | |
RND_Expt-1 | −0.4145 *** | 0.0195 | 0.0270 | −0.3939*** | 1.4102* | 0.5583 |
(−10.45) | (0.25) | (1.32) | (−3.51) | (2.07) | (1.32) | |
Index_D | 0.0462 *** | −0.0041 * | −0.0015 | 0.0244* | 0.0303 | 0.0005 |
(3.94) | (−2.20) | (−1.80) | (2.26) | (0.39) | (0.01) | |
Adjusted R2 | 0.1230 | 0.0106 | 0.0006 | 0.1217 | 0.0418 | 0.0063 |
Observations | 713 | 501 | 713 | 501 | 713 | 501 |
Panel B | Persistencet | ValueRelevancet | Timelinesst | |||
Variable | Low Liquidity | High Liquidity | Low Liquidity | High Liquidity | Low Liquidity | High Liquidity |
Intercept | 0.1141 *** | 0.1168 ** | −0.2381 *** | −1.0880 *** | 0.0530 | −1.8791 *** |
(5.78) | (2.61) | (−7.32) | (−357.75) | (1.16) | (−10.12) | |
KNPS_BIOt-1 | 0.4572 | 0.0760 *** | −0.0155 | 0.3599 *** | 0.2510 | 1.3165 ** |
(0.58) | (3.61) | (−0.56) | (7.90) | (0.28) | (2.92) | |
SIZEt-1 | −0.0053 *** | 0.0373 ** | 0.0125 * | −0.0010 | 0.0412 ** | 0.5042 *** |
(−3.48) | (2.66) | (2.20) | (−0.57) | (2.60) | (10.76) | |
LEVt-1 | 0.0255 *** | −0.0093 | −0.0780 *** | −0.0079 ** | 0.1192 | −0.4658 *** |
(4.57) | (−0.28) | (−9.51) | (−2.46) | (1.57) | (−4.36) | |
ROAt-1 | −0.0677 *** | 0.0820 ** | 0.0908 ** | 0.0064 | 0.1061 ** | 1.3482 *** |
(−6.95) | (3.02) | (3.28) | (1.41) | (2.41) | (8.69) | |
MBt-1 | 0.0001 *** | 0.0001 * | −0.0001 ** | −0.0001 | 0.0001 | −0.0001 *** |
(8.39) | (2.19) | (−2.56) | (−0.40) | (0.21) | (−4.92) | |
Sales_Gt-1 | 0.0001 | −0.0058 | 0.0117 ** | −0.0009 | −0.0202 | −0.1368 ** |
(0.03) | (−0.25) | (2.66) | (−0.59) | (−1.06) | (−2.50) | |
STD_Salest-1 | 0.0095 *** | −0.0208 * | −0.0235 *** | 0.0019 ** | −0.0064 | −0.1900 *** |
(6.08) | (−2.10) | (−7.68) | (2.86) | (−0.45) | (−4.01) | |
STD_OCFt-1 | 0.1569 *** | −0.3787 ** | −0.0372 | 0.0024 | 0.2169 | 2.3434 *** |
(8.69) | (−2.40) | (−0.49) | (0.38) | (0.75) | (3.44) | |
Firm_Aget-1 | −0.0138 *** | −0.0102 | 0.0254 *** | −0.0032 *** | −0.0053 | 0.1483 ** |
(−4.35) | (−0.72) | (4.50) | (−3.48) | (−0.53) | (2.78) | |
RND_Expt-1 | 0.0195 | −0.4145 *** | −0.3939 *** | 0.0270 | 0.5583 | 1.4102 * |
(0.25) | (−10.45) | (−3.51) | (1.32) | (1.32) | (2.07) | |
Index_D | −0.0041 * | 0.0462 *** | 0.0244 * | −0.0015 | 0.0005 | 0.0303 |
(−2.20) | (3.94) | (2.26) | (−1.80) | (0.01) | (0.39) | |
Adjusted R2 | 0.1230 | 0.0106 | 0.0006 | 0.1217 | 0.0418 | 0.0063 |
Observations | 604 | 610 | 604 | 610 | 604 | 610 |
Variable | Persistencet | ValueRelevancet | Timelinesst |
---|---|---|---|
Intercept | −1.7944 *** | −0.2116 *** | 0.0779 |
(−8.26) | (-5.67) | (1.09) | |
KNPS_BIOt-1 | −0.0033 | −0.0451 * | −0.0011 |
(−0.69) | (−2.74) | (−0.54) | |
Chaebol_Dummy | 0.0723 ** | 0.0070 | −0.0456 |
(2.41) | (0.60) | (−0.81) | |
KNPS_BIOt-1 x Chaebol_Dummy | 1.6092 *** | 0.4066 *** | 1.4425 * |
(8.46) | (6.32) | (2.39) | |
SIZEt-1 | 0.5363 *** | 0.0157 ** | 0.0219 |
(8.42) | (3.00) | (1.91) | |
LEVt-1 | −0.6164 *** | −0.0765 *** | 0.0322 |
(−15.18) | (−12.31) | (0.61) | |
ROAt-1 | 1.4482 *** | 0.1215 *** | 0.1676 ** |
(11.55) | (6.47) | (4.33) | |
MBt-1 | −0.0001 *** | −0.0001 * | 0.0001 |
(−5.81) | (−2.64) | (0.71) | |
Sales_Gt-1 | −0.0683 | 0.0140 * | −0.0083 |
(−1.76) | (2.58) | (−0.57) | |
STD_Salest-1 | −0.2512 *** | −0.0203 *** | −0.0053 |
(−6.46) | (−7.92) | (−0.36) | |
STD_OCFt-1 | 1.4074 * | −0.0435 | 0.4850 ** |
(2.76) | (−0.36) | (4.05) | |
Firm_Aget-1 | 0.1106 | 0.0250 ** | −0.0067 |
(1.64) | (3.68) | (−0.36) | |
RND_Expt-1 | 2.2243 *** | −0.3874 * | −0.0585 |
(5.43) | (−2.29) | (−0.40) | |
Index_D | −0.0675 | 0.0115 | 0.0086 |
(−0.84) | (0.83) | (0.12) | |
Adjusted R2 | 0.1153 | 0.0457 | 0.0056 |
Observations | 1214 | 1214 | 1214 |
Variable | Persistencet | ValueRelevancet | Timelinesst |
---|---|---|---|
Intercept | −1.3432 *** | −0.2080 *** | −0.0974 |
(−7.50) | (−5.99) | (−0.37) | |
KNPS_BIO_IVt-1 | 2.1578 ** | 1.3335 *** | 1.5858 * |
(2.90) | (3.40) | (2.09) | |
SIZEt-1 | 0.1866 *** | 0.0028 | −0.0209 |
(4.05) | (0.42) | (−0.64) | |
LEVt-1 | −0.0237 | −0.0009 | 0.0742 |
(−0.17) | (−0.04) | (0.55) | |
ROAt-1 | 1.7174 *** | 0.2044 ** | −0.2462 |
(4.45) | (3.19) | (−0.94) | |
MBt-1 | 0.0001 | −0.0001 ** | 0.0001 |
(0.25) | (−2.53) | (1.15) | |
Sales_Gt-1 | 0.0737 | 0.0008 | 0.0475 |
(0.50) | (0.10) | (0.54) | |
STD_Salest-1 | −0.1866 * | −0.0154 *** | −0.0013 |
(−2.13) | (−9.09) | (−0.04) | |
STD_OCFt-1 | 1.0573 | −0.0587 | 0.3337 * |
(1.42) | (−0.56) | (2.15) | |
Firm_Aget-1 | −0.0806 | 0.0159 * | 0.0396 |
(−0.77) | (1.97) | (0.96) | |
RND_Expt-1 | −1.0908 | −0.6349 | −0.3272 |
(−0.45) | (−1.69) | (−0.48) | |
Adjusted R2 | 0.1268 | 0.1095 | 0.0536 |
Observations | 1214 | 1214 | 1214 |
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Choi, D.; Choi, P.M.S.; Choi, J.H.; Chung, C.Y. Does Sustainable Corporate Governance Enhance Accounting Practice? Evidence from the Korean Market. Sustainability 2020, 12, 2585. https://doi.org/10.3390/su12072585
Choi D, Choi PMS, Choi JH, Chung CY. Does Sustainable Corporate Governance Enhance Accounting Practice? Evidence from the Korean Market. Sustainability. 2020; 12(7):2585. https://doi.org/10.3390/su12072585
Chicago/Turabian StyleChoi, Daeheon, Paul Moon Sub Choi, Joung Hwa Choi, and Chune Young Chung. 2020. "Does Sustainable Corporate Governance Enhance Accounting Practice? Evidence from the Korean Market" Sustainability 12, no. 7: 2585. https://doi.org/10.3390/su12072585