외국인투자자와 기업의 ESG 활동수준: 외국인투자자 투자기간을 중심으로

Using 8,345 firm-year data set comprised of listed firms from 2012 to 2022, this study analyze the impact of foreign investors’ horizon measured by investment turnover on a firm’s ESG activities. Empirical results show that an increase in foreign investors’ investment horizon enhances a firm’s ESG activities. The results remain the same when a firm’s ESG activities is measured by total ESG grade or individual E(Environmental), S(Social), G(Governance) grade provided by KCGS(Korea Institute of Corporate Governance and Sustainability). This indicates that long-term foreign investors focus on sustainable growth of a firm rather than pursuing short-term gains, and exert influence over a firm to engage in ESG activities. The first additional analysis of this study is to examine the effect of foreign investors on a firm’s ESG activities considering both investment horizons and ownership. Long-term foreign investors encourage a firm’s ESG activities regardless of the level of ownership, while short-term foreign investors with large or small ownership do not effectively monitor a firm’s ESG activities. This suggests the importance of investment horizons when evaluating the monitoring role of foreign investors on a firm’s ESG activities. The second additional analysis shows that the effect of foreign investors’ investment horizons on a firm’s ESG activities is not significant in large firms, while an increase in foreign investors’ investment horizon intensify a firm’s ESG activities in other firms. This study contributes to the literature by focusing on the monitoring role of foreign investors on a firm’s ESG activities with respect to investment turnover. Prior studies look at the effect of foreign investors on a firm’s ESG activities in terms of ownership only, but this study shows that long-term foreign investors and short-term foreign investors have differential effect on a firm’s ESG activities.