The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China
By D. Broadstock, Kalok Chan, Louis T. W. Cheng, Xiaowei Wang. Finance Research Letters, 2020
1,379 citations recorded by the source corpus.
We examine the role of ESG performance during market-wide financial crisis, triggered in response to the COVID-19 global pandemic. The unique circumstances create an inimitable opportunity to question if investors interpret ESG performance as a signal of future stock performance and/or risk mitigation. Using a novel dataset covering China’s CSI300 constituents, we show (i) high-ESG portfolios generally outperform low-ESG portfolios (ii) ESG performance mitigates financial risk during financial crisis and (iii) the role of ESG performance is attenuated in ‘normal’ times, confirming its incremental importance during crisis. We phrase the results in the context of ESG investment practices.
Subfields: Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/98d52a20de71f6c56ccbe49867f80e7e28aea43b
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Citations in the corpus
- When ESG meets AAA: The effect of ESG rating changes on stock returns (2021, positive): “The risk content of ESG ratings in times of market stress is reinforced by Broadstock et al. (2021) who find that companies with high ESG ratings performed better during the COVID-19 pandemic in China and by Ferriani and Natoli (2020), who report strong investor preferences for low-ESG risk funds…”
- Banking sector reactions to COVID-19: The role of bank-specific factors and government policy responses (2021, positive): “A similar finding was reported by Broadstock et al. (2021); they found that higher ESG performance decreased financial risk, and portfolios with high-ESG scores generally outperformed low-ESG portfolios.”