Effects of Foreign directors' nationalities and director types on corporate philanthropic behavior: Evidence from Korean firms

Yeong Seon Kang, Eunji Huh, Mi Hee Lim

Research output: Contribution to journalArticlepeer-review

21 Scopus citations

Abstract

Addressing the fact that there are few studies exploring the relationship between board characteristics and corporate social responsibility (CSR) in non-Western contexts, this study examines the relationship in South Korean corporate contexts. We concentrate on foreign directors as a board attribute, which is reported as a remarkable change in Korean corporate boards, and propose that foreign directors have different impacts on CSR investment depending on their nationality (Anglo-Americans vs. non-Anglo-Americans) and director types (insiders vs. outsiders). In detail, the presence of directors from Anglo-American countries (e.g., the United States, the United Kingdom) decreases firms' CSR involvement, whereas the presence of directors from non-Anglo-American countries (e.g., France, Germany) increases firms' CSR involvement. Moreover, the effects of Anglo-Americans on CSR are strengthened when they are inside (rather than outside) directors. Empirical analyses using a sample of 1828 Korean firms from 2002 to 2015 provide evidence to support the predictions. This study theoretically contributes to CSR and corporate governance literature in that it sheds light on the CSR in non-Western companies and reveals varied effects of foreign directors contingent upon their individual attributes. It also has practical implications for policymakers and corporate managers by providing insights of the changes generated by foreign members in a boardroom.

Original languageEnglish
Article number3132
JournalSustainability (Switzerland)
Volume11
Issue number11
DOIs
StatePublished - 1 Jun 2019

Keywords

  • Board of directors
  • Corporate philanthropy
  • Director nationality
  • Director types
  • South Korea

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