Study on the Relationship Between ESG Announcement and Physical Division Announcement

This study aims to analyze the relationship between physical division and ESG announcement, examining the relationship between corporate restructuring processes and ESG announcement. Analyzing the differences in variables according to ESG announcement before the physical division, significant differences were found in companies with ESG announcement regarding asset size(ASSET), operating cash flow ratio(OCFAR), foreign ownership ratio(FOREIGNER), and debt ratio(DEBTR). However, no significant differences were found in the largest shareholder ownership ratio(LSH), Herfindahl index(HERFINDHAL), and price-to-book ratio(PBR). Examining the abnormal returns(AAR) and cumulative abnormal returns(CAAR) before and after the announcement date of physically divided companies, companies with ESG ratings recorded statistically significant higher returns around the announcement date. This indicates that ESG announcement can elicit positive market reactions for the company. Further, examining the stock price reactions around the announcement date of physically divided companies, those with ESG announcement showed higher abnormal returns(AAR). ESG announcement had a significant impact on cumulative abnormal returns(CAAR) in all models, with the price-to-book ratio(PBR) also showing significant impact in some models. This study comprehensively analyzes the relationship between physical division and ESG announcement, clearly demonstrating that ESG evaluation can positively impact corporate restructuring processes. Specifically, it investigates whether ESG announcement can mitigate the negative announcement effects of physical division. ESG announcement promotes sustainable corporate management and can positively impact companies undergoing restructuring processes such as physical division. This research provides meaningful insights for both managers and investors by clarifying the relationship between ESG announcement and physical division announcement.