Asian Business & Management

, Volume 11, Issue 2, pp 219–246

Do ethical companies have lower implied cost of equity capital? Evidence from the Korean stock market

  • Tae H Choi
Original Article

DOI: 10.1057/abm.2011.32

Cite this article as:
Choi, T. Asian Bus Manage (2012) 11: 219. doi:10.1057/abm.2011.32


This study examines company business ethics (BE) as one of the important factors of corporate valuation. It looks into the causal relations between the level of a company's ethical commitment and risk measures, and the association of both with the costs of equity capital (COC). The link between BE and firm value is examined by investigating (a) the degree of companies’ ethical commitment, (b) implied costs of capital and (c) the valuation of companies listed on the Korean stock market. Our results confirm the existence of a significantly negative association between the level of commitment to BE and the implied COC.


business ethicsethical commitmentfinancial performancevaluationcost of capitalequity premium

Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Ltd 2012

Authors and Affiliations

  • Tae H Choi
    • 1
    • 2
  1. 1.KDI School of Public Policy and ManagementSeoulSouth Korea
  2. 2.Center for Accounting Research and Education, University of Notre DameIndianaUSA