A Study on Corporate Social Responsibility and Corporate Scandals of Chaebol

Purpose – This study reviews the corporate social responsibility (CSR) activities of Korea Composite Stock Price Index (KOSPI) companies involved in scandals. Additionally, we study Chaebol companies’ CSR activities of involved in the scandal and analyzes how much Chaebol companies with scandals spend on charitable donations. Design/Methodology/Approach – We exploit 11,975 firm-years listed on the Korea Exchange from 2001 to 2021, using the KOSPI firms as samples. We estimate the multiple regression model to test hypotheses. Also, we construct a one-to-one matching sample using the propensity score matching method to overcome endogeneity problems and to check the robustness. Findings – The analysis finds that companies with scandals donate more than those without. In addition, among these companies, Chaebol companies with scandals tend to spend less on donations. Research Implications – When corporate scandals occur, listed companies in Korea Exchange try to improve their image by actively engaging in CSR activities. However, Chaebol companies are not likely to engage in vigorous CSR activities even during scandals. The ethical level of a company can be inferred through its donation activities, depending on the situation.