Charitable Donations for Corporate Sustainability: Exploring the Impact on the Firm Value of Korean Game Companies

The game industry in Korea is gaining significant attention as a high-value-added sector, representing the largest share of Korean cultural content exports. However, game companies are facing criticism due to their limited involvement in social contributions, despite the various issues caused by games. Addressing these criticisms of Korean game companies is vital, as it poses a notable risk to their sustainability. This study aims to examine whether game companies’ charitable donation activities can serve as a viable solution. Accordingly, our study empirically investigates whether Korean game companies indeed contribute less to charitable causes and how their charitable donations impact firm value. Using financial data of companies listed on the Korean stock market from 2011 to 2019, we compare the scale of charitable donations between companies in the gaming industry and those in other industries. Moreover, we investigate whether charitable donations by game companies contribute to increasing firm value. Our findings reveal that Korean game companies tend to donate less to charity compared to other companies. However, we also identify a positive association between charitable donations and firm value, which is particularly pronounced within the game industry. This study illuminates the importance of charitable donations as a strategic tool for enhancing firm value and emphasizes the role of game companies in promoting societal welfare and sustainable management.