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

David C. Broadstock; Kalok Chan; Louis T.W. Cheng; Xiaowei Wang

doi:10.1016/j.frl.2020.101716

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

David C. Broadstock^*
, Kalok Chan
, Louis T.W. Cheng
, Xiaowei Wang

^*Corresponding author for this work

Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review

1170 Citations (Scopus)

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. © 2020 Elsevier Inc.

Original language	English
Article number	101716
Journal	Finance Research Letters
Volume	38
Online published	13 Aug 2020
DOIs	https://doi.org/10.1016/j.frl.2020.101716
Publication status	Published - Jan 2021
Externally published	Yes

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 3 Good Health and Well-being
SDG 10 Reduced Inequalities

Research Keywords

China
COVID-19
Environmental, Social and Governance (ESG)
Financial crisis
Pandemic

Policy Impact

Cited in Policy Documents

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10.1016/j.frl.2020.101716

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title = "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 {\textquoteleft}normal{\textquoteright} times, confirming its incremental importance during crisis. We phrase the results in the context of ESG investment practices. {\textcopyright} 2020 Elsevier Inc.",

keywords = "China, COVID-19, Environmental, Social and Governance (ESG), Financial crisis, Pandemic",

author = "Broadstock, \{David C.\} and Kalok Chan and Cheng, \{Louis T.W.\} and Xiaowei Wang",

year = "2021",

month = jan,

doi = "10.1016/j.frl.2020.101716",

language = "English",

volume = "38",

journal = "Finance Research Letters",

issn = "1544-6123",

publisher = "Elsevier B.V.",

}

TY - JOUR

T1 - The role of ESG performance during times of financial crisis

T2 - Evidence from COVID-19 in China

AU - Broadstock, David C.

AU - Chan, Kalok

AU - Cheng, Louis T.W.

AU - Wang, Xiaowei

PY - 2021/1

Y1 - 2021/1

N2 - 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. © 2020 Elsevier Inc.

AB - 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. © 2020 Elsevier Inc.

KW - China

KW - COVID-19

KW - Environmental, Social and Governance (ESG)

KW - Financial crisis

KW - Pandemic

UR - https://www.scopus.com/pages/publications/85092444276

UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-85092444276&origin=recordpage

UR - https://app-overton-io.ezproxy.cityu.edu.hk/articles.php?query=10.1016/j.frl.2020.101716

U2 - 10.1016/j.frl.2020.101716

DO - 10.1016/j.frl.2020.101716

M3 - RGC 21 - Publication in refereed journal

C2 - 32837385

SN - 1544-6123

VL - 38

JO - Finance Research Letters

JF - Finance Research Letters

M1 - 101716

ER -

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

Abstract

UN SDGs

Research Keywords

Policy Impact

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