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The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China.

ABSTRACT: 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.

SUBMITTER: Broadstock DC

PROVIDER: S-EPMC7425769 | biostudies-literature | 2021 Jan

REPOSITORIES: biostudies-literature

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The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China.

Broadstock David C DC Chan Kalok K Cheng Louis T W LTW Wang Xiaowei X

Finance research letters 20200813

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 c ...[more]

PMID: 32837385

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