Investor rewards to environmental responsibility: Evidence from the COVID-19 crisis

By Alexandre Garel, Arthur Petit-Romec. Journal of Corporate Finance, 2021

242 citations recorded by the source corpus.

The COVID-19 shock and its unprecedented financial consequences have brought about vast uncertainty concerning the future of climate actions. We study the cross-section of stock returns during the COVID-19 shock to explore investors' views and expectations about environmental issues. The results show that firms with responsible strategies on environmental issues experience better stock returns. This effect is mainly driven by initiatives addressing climate change (e.g., reduction of environmental emissions and energy use), is more pronounced for firms with greater ownership by investors with long-term orientation and is not observed prior to the COVID-19 crisis. Overall, the results indicate that the COVID-19 shock has not distracted investors' attention away from environmental issues but on the contrary led them to reward climate responsibility to a larger extent.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/890cfa1fabd8e63e5e7e7da5b117780405ef40a4

Citations in the corpus

• Investor Rewards to Climate Responsibility: Stock-Price Responses to the Opposite Shocks of the 2016 and 2020 U.S. Elections (2021, unknown): “In the COVID-19 crash, companies fared better if they had strong environmental and social (ES) performances (Albuquerque et al., 2020; Garel and Petit-Romec, 2021), though this result has been the subject of some debate (Demers et al., 2020; Mahmoud and Meyer, 2020).”