The Effect of Environmental, Social and Governance (ESG) on Foreign Equity

This paper examines the empirical association between environmental, social and governance (ESG) and the foreign equity. Based on the argument that ESG management would benefit shareholders by reducing firms’ downside risk. This study examined the effect of ESG management on the foreign equity using a large sample of Korean firms. The ESG index announced by the Korea Corporate Governance Service (KCGS) was used as a measurement variable for ESG. The results of this study find that the foreign equity borne by companies that actively carry out ESG activities was high. That is, ESG activities have a positive effect on the capital market and increase foreign ownership.