Best Paper Award at Cornell ESG Investing Research Conference 2023

We examine whether foreign institutional capital promotes green growth in emerging-market firms, using firmlevel and China A-shares’ market-level inclusions in the MSCI Index as shocks to foreign capital. While foreign capital boosts output in emerging-market firms, emissions rise disproportionately, leading to substantial increases in emissions intensity. In contrast, emissions intensities of developed-market firms tend not to increase with foreign capital. These increases in emissions intensity are concentrated in emerging markets with weaker environmental regulations and firms held by funds driven more by financial incentives, consistent with financial concerns dominating environmental concerns in emerging market investors. Overall, results suggest that environmental considerations are assigned lower priority when emerging-market firms utilize foreign capital for growth.

I study if firms deliberately sacrifice workplace safety for profits by using contract workers, for whom they are not legally liable. I exploit a regression discontinuity design around the amendment to the Occupational Health and Safety Act in Korea, 2017, which expanded the legal accountability of firms to cover contract workers. The number of contract workers decreased by 18.1% in affected establishments compared to unaffected establishments. This change was not compensated by direct hiring, causing overall employment to fall by 1.3%. Working hours and wage costs paid to directly hired employees increased to make up for the resulting losses in work hours from the contract workers. Workplace safety improved at affected establishments at the cost of higher safety investment. Profitability dropped in affected firms, and those firms reacted by shrinking investments. The results are consistent with firms strategically outsourcing risky jobs to contract workers to offload their duties on workplace safety. 

We study how corporate foundations use capital for the benefit of controlling shareholders at the expense of the value of minority shareholders. Using the 2013 Fair Trade Act amendment in Korea, restricting ownership concentration by controlling shareholders in large business groups (\textit{chaebol}s), we conduct difference-in-differences tests and find that corporate foundations of exposed \textit{chaebol}s increased ownership in member firms by 5\%, preserving ownership of controlling shareholders. Market reacts negatively, mainly in member firms with past donations, and the member firms’ value of cash donations decreases.  Exposed corporate foundations reduced philanthropic expenses. Results suggest that resources in corporate foundations are extracted to benefit controlling shareholders, undermining donation value for minority shareholders.