This paper examines how corporate social responsibility is related to the degree of asymmetric information in the Korean financial market. Recent theory argues that there is a negative relationship between a firm’s corporate social responsibility and its information asymmetry. To test this hypothesis, we use the environment, social and governance (ESG) score, published by the Korean Corporate Governance Service, to proxy a firm’s management practices toward socially responsible activities. In the entire sample of the Korean firms, we find contrasting results; the ESG score shows negative relationships with the price impact measure but statistically insignificant relationships with the dispersion of analyst forecasts. However, the ESG score shows negative relationships with both measures when we exclude chaebol affiliates from the sample. These findings are robust when we examine environmental, social and corporate governance scores separately. This set of results argues for the extant theory, expecting a negative relationship between a firm’s engagement in corporate social responsibility and asymmetric information. It further argues for the importance of firm characteristics in determining the influence of socially responsible activities.

Abstract
 1. Introduction
 2. Related Literature
 3. Data and Empirical Method
  3.1. Data and Empirical Model
  3.2. Data Description
 4. Main Results
  4.1. ESG-score
  4.2. Estimation Results: Environmental, Social and Governance Score.
 5. Concluding Remarks
 References

• Jeong-Hwan Lee(College of Economics and Finance, Hanyang University) Corresponding Author
• Bohyun Yoon(Division of Economics and Information Statistics, Kangwon National University)