The Impact of Non-Compliance with Mandatory Employment of People with Disabilities on Firm Value: Evidence from the Korean Market

This study examines the impact of non-compliance with mandatory employment quotas for people with disabilities on the financial performance of firms listed on the KOSPI from 2011 to 2020. The Korean Ministry of Employment and Labor publishes an annual list of firms that fail to meet at least half of the disability employment quotas and do not sufficiently engage in improvement efforts. Analyzing this list, we find that public disclosure of a firm’s inclusion on this list has no impact on the firm’s value or performance, suggesting that investors are indifferent to firms’ failures to meet these mandatory quotas. Additionally, non-compliant firms tend to continue not complying with the disability-hiring quota. These results suggest that the imposition of uniform disability employment rates across industries and firms of varying sizes is ineffective. The findings of this paper overall highlight the need for more pragmatic, industry-tailored, and flexible disability employment policies that hold significance for both investors and employers.