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Can good ESG performance help companies resist external shocks?

In order to validate the varied conclusions regarding the integration of corporate ESG practices by investors during external shocks, this study utilises the COVID-19 crisis as a specific external shock. The findings from our difference-in-differences methodology suggest that companies demonstrating...

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Main Authors: Yang, Xin, Sheikh Hassan, Ahmad Fahmi, Karbhari, Yusuf
Format: Article
Language:English
Published: Taylor and Francis 2024
Online Access:http://psasir.upm.edu.my/id/eprint/114762/1/114762.pdf
http://psasir.upm.edu.my/id/eprint/114762/
https://www.tandfonline.com/doi/full/10.1080/10293523.2024.2430831
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spelling my.upm.eprints.1147622025-01-31T01:04:26Z http://psasir.upm.edu.my/id/eprint/114762/ Can good ESG performance help companies resist external shocks? Yang, Xin Sheikh Hassan, Ahmad Fahmi Karbhari, Yusuf In order to validate the varied conclusions regarding the integration of corporate ESG practices by investors during external shocks, this study utilises the COVID-19 crisis as a specific external shock. The findings from our difference-in-differences methodology suggest that companies demonstrating strong ESG performance have succeeded in reducing idiosyncratic risk throughout the pandemic period. Additionally, we uncover that revenue growth acts as a critical pathway through which ESG performance reduces firm-specific risk, highlighting that firms with strong ESG practices achieved higher revenue growth, which in turn contributed to risk reduction. Further analysis shows that the political environment and dividend policy influence this relationship, as examined through heterogeneity analysis. By employing the quantile difference-in-difference technique in conjunction with the adaptive Markov Chain Monte Carlo method, we depict the dynamic evolution track of the marginal effect of ESG performance across various levels of idiosyncratic risk. Our results remain robust even after a series of rigorous robustness checks. Taylor and Francis 2024-12-10 Article PeerReviewed text en cc_by_nc_nd_4 http://psasir.upm.edu.my/id/eprint/114762/1/114762.pdf Yang, Xin and Sheikh Hassan, Ahmad Fahmi and Karbhari, Yusuf (2024) Can good ESG performance help companies resist external shocks? Investment Analysts Journal. pp. 1-25. ISSN 1029-3523; eISSN: 2077-0227 https://www.tandfonline.com/doi/full/10.1080/10293523.2024.2430831 10.1080/10293523.2024.2430831
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description In order to validate the varied conclusions regarding the integration of corporate ESG practices by investors during external shocks, this study utilises the COVID-19 crisis as a specific external shock. The findings from our difference-in-differences methodology suggest that companies demonstrating strong ESG performance have succeeded in reducing idiosyncratic risk throughout the pandemic period. Additionally, we uncover that revenue growth acts as a critical pathway through which ESG performance reduces firm-specific risk, highlighting that firms with strong ESG practices achieved higher revenue growth, which in turn contributed to risk reduction. Further analysis shows that the political environment and dividend policy influence this relationship, as examined through heterogeneity analysis. By employing the quantile difference-in-difference technique in conjunction with the adaptive Markov Chain Monte Carlo method, we depict the dynamic evolution track of the marginal effect of ESG performance across various levels of idiosyncratic risk. Our results remain robust even after a series of rigorous robustness checks.
format Article
author Yang, Xin
Sheikh Hassan, Ahmad Fahmi
Karbhari, Yusuf
spellingShingle Yang, Xin
Sheikh Hassan, Ahmad Fahmi
Karbhari, Yusuf
Can good ESG performance help companies resist external shocks?
author_facet Yang, Xin
Sheikh Hassan, Ahmad Fahmi
Karbhari, Yusuf
author_sort Yang, Xin
title Can good ESG performance help companies resist external shocks?
title_short Can good ESG performance help companies resist external shocks?
title_full Can good ESG performance help companies resist external shocks?
title_fullStr Can good ESG performance help companies resist external shocks?
title_full_unstemmed Can good ESG performance help companies resist external shocks?
title_sort can good esg performance help companies resist external shocks?
publisher Taylor and Francis
publishDate 2024
url http://psasir.upm.edu.my/id/eprint/114762/1/114762.pdf
http://psasir.upm.edu.my/id/eprint/114762/
https://www.tandfonline.com/doi/full/10.1080/10293523.2024.2430831
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score 13.244413

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