Does corporate governance report disclosure increase stock retirement? Evidence from Korea

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This study examines the influence of the mandatory disclosure of corporate governance reports on stock retirement in Korea. Given the challenges of applying stock repurchasing to measure shareholder return policy in the Korean stock market, this study focuses on stock retirement as a key indicator to examine the effectiveness of introducing the corporate governance report on shareholder return policy. Employing the Difference-in-Differences approach followed, this paper conducts empirical analyses based on 5,932 observations from 2011 to 2020. The main findings indicate a significant increase in stock retirement by companies implementing mandatory disclosures of corporate governance reports (coef = 0.018, p-value <0.01) compared to companies that do not disclose them. The results of the alternative measures for stock retirement and propensity score matching (PSM) model also present a positive association between mandatory disclosure of corporate governance reports and stock retirement, respectively (coef = 0.400 and 1.421, p-value <0.01; coef = 0.019, p-value < 0.1). This study provides evidence to support the notion that introducing corporate governance reports enhances overall shareholder returns, leading to an increase in stock retirement. Moreover, these findings validate that stock retirement is an adequate proxy for analyzing the level of shareholder returns in Korean firms.

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    • Table 1. Descriptive statistics
    • Table 2. T-test
    • Table 3. Correlation matrix
    • Table 4. Corporate governance report and stock retirement
    • Table 5. Corporate governance report and stock retirement: Using an alternative measure of RETIRE
    • Table 6. Corporate governance report and stock retirement: Using PSM
    • Table 7. Corporate governance report and stock retirement: Using the balanced period sample
    • Table 8. Corporate governance report and stock retirement: Using the repurchased group
    • Table A1. Variable definitions
    • Table B1. Compliance with corporate governance key indices
    • Conceptualization
      Hyoung Seok Choo, Taegon Moon, Sun-ae Cho, Doocheol Moon
    • Data curation
      Hyoung Seok Choo, Sun-ae Cho, Doocheol Moon
    • Formal Analysis
      Hyoung Seok Choo, Sun-ae Cho, Doocheol Moon
    • Investigation
      Hyoung Seok Choo, Taegon Moon
    • Methodology
      Hyoung Seok Choo, Taegon Moon, Sun-ae Cho
    • Software
      Hyoung Seok Choo, Taegon Moon
    • Writing – review & editing
      Hyoung Seok Choo, Taegon Moon, Sun-ae Cho, Doocheol Moon
    • Project administration
      Taegon Moon
    • Supervision
      Taegon Moon, Sun-ae Cho, Doocheol Moon
    • Visualization
      Taegon Moon
    • Writing – original draft
      Taegon Moon