Stock Market Reaction to Corporate Crime: Evidence from South Korea
This paper examines the impact of corporate crime on the stock market in South Korea. Specifically, we examine the effect of crime type (white-collar vs. street crime, operational vs. financial), industry type (financial vs. industrial), business group affiliation (chaebol-affiliated vs. non-chaebol...
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| Veröffentlicht in: | Journal of business ethics 2017-06, Vol.143 (2), p.323-351 |
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| creator | Song, Chanhoo Han, Seung Hun |
| description | This paper examines the impact of corporate crime on the stock market in South Korea. Specifically, we examine the effect of crime type (white-collar vs. street crime, operational vs. financial), industry type (financial vs. industrial), business group affiliation (chaebol-affiliated vs. non-chaebol-affiliated), and corporate governance (strong vs. weak board structure index) on the relationship between corporate crime announcement and stock market reaction. We find negative reactions to stock prices around the announcements of corporate crimes but no significant difference in reactions between announcements of individual and organizational crimes. Individual white-collar crimes have a stronger negative impact on stock prices than do individual street crimes on average, while financial crimes have a significantly greater negative impact than do operational crimes in organizations. Moreover, financial sector firms are impacted more significantly by the announcement of corporate crimes than are non-financial firms. In addition, the stock prices of chaebol-affiliated firms decrease less than do those of non-chaebol-affiliated firms, and those with a higher board committee subindex seem to be influenced less by news of corporate crimes if the size control variable is excluded. Multivariate cross-sectional analyses show consistent findings after controlling for firm-specific factors, crime-type effect, and industry and year effects. The results of this study provide valuable insights because it covers several types of corporate crime, including those committed by individuals and those perpetrated by firms. |
| doi_str_mv | 10.1007/s10551-015-2717-y |
| format | Article |
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Specifically, we examine the effect of crime type (white-collar vs. street crime, operational vs. financial), industry type (financial vs. industrial), business group affiliation (chaebol-affiliated vs. non-chaebol-affiliated), and corporate governance (strong vs. weak board structure index) on the relationship between corporate crime announcement and stock market reaction. We find negative reactions to stock prices around the announcements of corporate crimes but no significant difference in reactions between announcements of individual and organizational crimes. Individual white-collar crimes have a stronger negative impact on stock prices than do individual street crimes on average, while financial crimes have a significantly greater negative impact than do operational crimes in organizations. Moreover, financial sector firms are impacted more significantly by the announcement of corporate crimes than are non-financial firms. In addition, the stock prices of chaebol-affiliated firms decrease less than do those of non-chaebol-affiliated firms, and those with a higher board committee subindex seem to be influenced less by news of corporate crimes if the size control variable is excluded. Multivariate cross-sectional analyses show consistent findings after controlling for firm-specific factors, crime-type effect, and industry and year effects. The results of this study provide valuable insights because it covers several types of corporate crime, including those committed by individuals and those perpetrated by firms.</description><identifier>ISSN: 0167-4544</identifier><identifier>EISSN: 1573-0697</identifier><identifier>DOI: 10.1007/s10551-015-2717-y</identifier><language>eng</language><publisher>Dordrecht: Springer</publisher><subject>Announcements ; Business and Management ; Business Ethics ; Companies ; Corporate governance ; Crime ; Cross-sectional studies ; Education ; Ethics ; Governance ; Management ; Multivariate analysis ; News ; Offenses ; Philosophy ; Prices ; Quality of Life Research ; Scandals ; Securities markets ; Stock exchanges ; Stock market crashes ; Street crime ; White collar crime</subject><ispartof>Journal of business ethics, 2017-06, Vol.143 (2), p.323-351</ispartof><rights>Springer Science+Business Media Dordrecht 2017</rights><rights>Springer Science+Business Media Dordrecht 2015</rights><rights>Journal of Business Ethics is a copyright of Springer, 2017.</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c400t-5d9e74a456c656d88028cb25935a4e56f38dd88e9c7a4d23ec996a8df8d7b59d3</citedby><cites>FETCH-LOGICAL-c400t-5d9e74a456c656d88028cb25935a4e56f38dd88e9c7a4d23ec996a8df8d7b59d3</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/44253116$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/44253116$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>314,780,784,803,27866,27924,27925,41488,42557,51319,58017,58250</link.rule.ids></links><search><creatorcontrib>Song, Chanhoo</creatorcontrib><creatorcontrib>Han, Seung Hun</creatorcontrib><title>Stock Market Reaction to Corporate Crime: Evidence from South Korea</title><title>Journal of business ethics</title><addtitle>J Bus Ethics</addtitle><description>This paper examines the impact of corporate crime on the stock market in South Korea. Specifically, we examine the effect of crime type (white-collar vs. street crime, operational vs. financial), industry type (financial vs. industrial), business group affiliation (chaebol-affiliated vs. non-chaebol-affiliated), and corporate governance (strong vs. weak board structure index) on the relationship between corporate crime announcement and stock market reaction. We find negative reactions to stock prices around the announcements of corporate crimes but no significant difference in reactions between announcements of individual and organizational crimes. Individual white-collar crimes have a stronger negative impact on stock prices than do individual street crimes on average, while financial crimes have a significantly greater negative impact than do operational crimes in organizations. Moreover, financial sector firms are impacted more significantly by the announcement of corporate crimes than are non-financial firms. In addition, the stock prices of chaebol-affiliated firms decrease less than do those of non-chaebol-affiliated firms, and those with a higher board committee subindex seem to be influenced less by news of corporate crimes if the size control variable is excluded. Multivariate cross-sectional analyses show consistent findings after controlling for firm-specific factors, crime-type effect, and industry and year effects. The results of this study provide valuable insights because it covers several types of corporate crime, including those committed by individuals and those perpetrated by firms.</description><subject>Announcements</subject><subject>Business and Management</subject><subject>Business Ethics</subject><subject>Companies</subject><subject>Corporate governance</subject><subject>Crime</subject><subject>Cross-sectional studies</subject><subject>Education</subject><subject>Ethics</subject><subject>Governance</subject><subject>Management</subject><subject>Multivariate analysis</subject><subject>News</subject><subject>Offenses</subject><subject>Philosophy</subject><subject>Prices</subject><subject>Quality of Life Research</subject><subject>Scandals</subject><subject>Securities markets</subject><subject>Stock exchanges</subject><subject>Stock market crashes</subject><subject>Street crime</subject><subject>White collar 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Market Reaction to Corporate Crime: Evidence from South Korea</title><author>Song, Chanhoo ; Han, Seung Hun</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c400t-5d9e74a456c656d88028cb25935a4e56f38dd88e9c7a4d23ec996a8df8d7b59d3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2017</creationdate><topic>Announcements</topic><topic>Business and Management</topic><topic>Business Ethics</topic><topic>Companies</topic><topic>Corporate governance</topic><topic>Crime</topic><topic>Cross-sectional studies</topic><topic>Education</topic><topic>Ethics</topic><topic>Governance</topic><topic>Management</topic><topic>Multivariate analysis</topic><topic>News</topic><topic>Offenses</topic><topic>Philosophy</topic><topic>Prices</topic><topic>Quality of Life Research</topic><topic>Scandals</topic><topic>Securities markets</topic><topic>Stock exchanges</topic><topic>Stock market crashes</topic><topic>Street crime</topic><topic>White collar crime</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Song, Chanhoo</creatorcontrib><creatorcontrib>Han, Seung Hun</creatorcontrib><collection>CrossRef</collection><collection>ProQuest Social Sciences Premium Collection</collection><collection>ProQuest Central (Corporate)</collection><collection>PAIS Index</collection><collection>Access via ABI/INFORM (ProQuest)</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>Healthcare Administration Database (Alumni)</collection><collection>Psychology Database (Alumni)</collection><collection>Social Science Database (Alumni Edition)</collection><collection>ProQuest Pharma Collection</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>Hospital Premium 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Hun</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Stock Market Reaction to Corporate Crime: Evidence from South Korea</atitle><jtitle>Journal of business ethics</jtitle><stitle>J Bus Ethics</stitle><date>2017-06-01</date><risdate>2017</risdate><volume>143</volume><issue>2</issue><spage>323</spage><epage>351</epage><pages>323-351</pages><issn>0167-4544</issn><eissn>1573-0697</eissn><abstract>This paper examines the impact of corporate crime on the stock market in South Korea. Specifically, we examine the effect of crime type (white-collar vs. street crime, operational vs. financial), industry type (financial vs. industrial), business group affiliation (chaebol-affiliated vs. non-chaebol-affiliated), and corporate governance (strong vs. weak board structure index) on the relationship between corporate crime announcement and stock market reaction. We find negative reactions to stock prices around the announcements of corporate crimes but no significant difference in reactions between announcements of individual and organizational crimes. Individual white-collar crimes have a stronger negative impact on stock prices than do individual street crimes on average, while financial crimes have a significantly greater negative impact than do operational crimes in organizations. Moreover, financial sector firms are impacted more significantly by the announcement of corporate crimes than are non-financial firms. In addition, the stock prices of chaebol-affiliated firms decrease less than do those of non-chaebol-affiliated firms, and those with a higher board committee subindex seem to be influenced less by news of corporate crimes if the size control variable is excluded. Multivariate cross-sectional analyses show consistent findings after controlling for firm-specific factors, crime-type effect, and industry and year effects. The results of this study provide valuable insights because it covers several types of corporate crime, including those committed by individuals and those perpetrated by firms.</abstract><cop>Dordrecht</cop><pub>Springer</pub><doi>10.1007/s10551-015-2717-y</doi><tpages>29</tpages></addata></record> |
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| ispartof | Journal of business ethics, 2017-06, Vol.143 (2), p.323-351 |
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| source | PAIS Index; SpringerNature Journals; EBSCOhost Business Source Complete; JSTOR Archive Collection A-Z Listing; EBSCOhost Education Source |
| subjects | Announcements Business and Management Business Ethics Companies Corporate governance Crime Cross-sectional studies Education Ethics Governance Management Multivariate analysis News Offenses Philosophy Prices Quality of Life Research Scandals Securities markets Stock exchanges Stock market crashes Street crime White collar crime |
| title | Stock Market Reaction to Corporate Crime: Evidence from South Korea |
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