• The Journal of the Convergence on Culture Technology
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• v.10 no.4
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• pp.323-329
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• 2024

This study examines the direct impact of ESG ratings on investment efficiency among Korean firms from 2012 to 2022, as well as whether earnings management mediates the relationship between ESG performance and investment efficiency. The key findings are as follows. Firstly, it was found that as ESG ratings increase, a firm's investment efficiency significantly improves, indicating that ESG management has a positive impact on investment efficiency. Secondly, as ESG ratings increase, earnings adjustment significantly decreases, suggesting that ESG investment activities also have a positive impact on firms' earnings management. Thirdly, as earnings adjustment decreases, investment efficiency significantly increases, indicating that earnings management significantly mediates the relationship between ESG performance and investment efficiency. This study demonstrates that higher ESG ratings lead to increased investment efficiency among firms, and earnings adjustmentment plays a significant mediating role in the relationship between ESG performance and investment efficiency.