The Effect of the Interaction Effect of Free Cash Flow Information and ESG Evaluation Information on Foreign Ownership

Abstract

The purpose of this study is to verify whether the interaction effect of free cash flow information and ESG evaluation information is related to foreign ownership and how it affects it. The research method is based on the free cash flow and foreign ownership ratio data from 2016 to 2020 provided by Fn-guide and ESG evaluation information data disclosed by the Corporate Governance Service, basic statistical analysis, correlation analysis, Regression analysis was performed. Summarizing the research results, the correlation analysis results show that the dependent variable foreign ownership ratio and variables of interest 1) free cash flow information and 2) ESG evaluation information (rating (R), environment (E), society (S), governance (G) category) showed a significant positive (+) correlation. And the results of the regression analysis show that the interaction effect information between free cash flow information and ESG evaluation information (rating (R), environment (E), society (S), and governance (G) sectors) excludes the social (S) sector. was found to have a significant positive (+) effect on the foreign ownership ratio. In other words, the higher the interaction effect between free cash flow information and ESG evaluation information, the higher the foreign ownership ratio. The implication of these research results suggests that foreign investors invest funds with interest in companies with high levels of free cash flow information and ESG evaluation information. Therefore, the interaction effect between free cash flow information and ESG evaluation information is expected to serve as useful accounting information for foreign investors in the capital market.