The purpose of this study is to empirically analyze the effects of labor union’s influence on the Corporate Social Responsibility(CSR) by using data of 350 firms listed in Korean Stock Exchange for 3 years from 2005 through 2008. Our research uses K...
The purpose of this study is to empirically analyze the effects of labor union’s influence on the Corporate Social Responsibility(CSR) by using data of 350 firms listed in Korean Stock Exchange for 3 years from 2005 through 2008. Our research uses KEJI index regarding to the CSR and existence of labor union and the union membership rate regarding to the effect of labor union’s influence by sharing information.
We would come to the following conclusions:
First, the empirical results shows significantly negative(-) relationship between the existence of labor union and the Corporate Social Responsibility(CSR). Therefore a firm with a unionized workforce reduces the CSR activities more than a firm with no unionized workforce. Second, the union membership rate has the significant negative(-) relationship with the CSR, as the rate of union membership negatively effects the CSR activities. Third, the influence of labor union has significant negative(-) correlation with the CSR as a result of robustness test by analyzing corporate social responsibility scores measured by fractional ranks variable. Fourth, negative relationship between the influence of the labor union and the CSR is founded mostly when a group has the high internal transaction and the low accrual quality. A labor union affects negatively on the CSR, as the corporate ownership structure is complicated and the information asymmetry increases. As a result of the interaction effect regarding to the ownership structure, equity ratio of foreign investors and interaction effect of labor union have positive effect on the CSR. In addition, the negative relationship between the labor union and the CSR could be founded on employees with low satisfaction. Labor unions with low job satisfaction have negative effect on the CSR. It showed that differences in employees’ satisfaction influence on differential reaction among groups.
This study has implications for practitioners and academics on the effect of labor union’s influence on the Corporate Social Responsibility. There is little evidence concerning empirical research on the CSR and effect of labor union’s influence on the CSR. Thus, the purpose of this study is to enhance understanding on this issue by examining the relationship between labor union and the CSR.