Keimyung University Professor Kyunghyun Kim's Team Empirically Analyzes: "Serious Accidents Punishment Act Restricts Corporate ESG Investment"

Published in the Prestigious Economics Journal 'Journal of Asian Economics'
Identifying the Impact of Increased Regulatory Compliance Costs on Long-Term Investment Reduction

A study has been published in an international academic journal showing that the introduction of the Serious Accidents Punishment Act in Korea may impact corporate ESG (Environmental, Social, and Governance) performance.

The study empirically analyzed that strengthened safety regulations can increase short-term cost burdens and regulatory uncertainty for companies, potentially discouraging long-term investment activities such as ESG investments.

Professor Kyunghyun Kim, Keimyung University

The paper, titled "The impact of the Serious Accidents Punishment Act on corporate ESG: Evidence from Korea," was published in the Journal of Asian Economics, a Q1 international journal in the field of economics (SSCI). Professor Kyunghyun Kim of the Department of Business Administration at Keimyung University served as the first author.

This research was jointly conducted with Sungmin Seo, Associate Research Fellow at the Korea Institute for Industrial Economics and Trade, who served as the corresponding author.

The study empirically analyzed the impact of the introduction of Korea's Serious Accidents Punishment Act (SAPA) on corporate ESG performance.

The research team focused on the situation where, after the law's enactment, companies were required to bear additional costs for expanding safety management personnel, establishing safety organizations, obtaining various certifications, and consulting services.

Based on this, the researchers hypothesized that increased short-term financial burdens and greater regulatory uncertainty could suppress ESG activities, which are linked to long-term value creation.

The analysis found that companies in industries with a higher likelihood of serious accidents experienced a significant decline in ESG scores after the law was introduced.

The decrease was particularly pronounced in the environmental (E) and social (S) components.

This is interpreted as being due to the close connection between the environmental and social components and direct corporate expenditures.

The research team empirically demonstrated that the increase in regulatory compliance costs can restrict ESG activities, which are characterized by long-term investment.

Professor Kyunghyun Kim stated, "Strengthening safety regulations is an important social goal," adding, "It is necessary to take a balanced view of how increased regulatory compliance costs that companies must bear in the short term affect long-term value creation activities, especially ESG investments."

He continued, "We hope this study will contribute to the joint design of industrial safety policies and corporate sustainability management strategies."

This research is significant both academically and in terms of policy, as it analyzed the impact of government regulations not only on the short-term cost structure of companies but also on their long-term investment strategies and overall sustainability management activities, using ESG as an integrated metric.

The research team expects that this study will serve as a practical reference for future industrial safety policy design and the development of corporate ESG strategies.

This content was produced with the assistance of AI translation services.