Bongiovanni, A. and Fiandrino, S. (2024) Does firm environmental performance mitigate the market reaction to COVID-19 uncertainty? Research in International Business and Finance, 68. 102193. ISSN 0275-5319
Abstract
This paper investigates how firms’ environmental performance affected the market reaction caused by the uncertainty of the COVID-19 pandemic. Our analysis focuses on a sample of 3854 non-financial listed companies from 21 advanced economies. We find that high environmentally sustainable practices (ESP) are associated with lower returns during the COVID-19 crisis, especially when the pandemic began to spread globally. Also, our results show that ESP is not significantly related to volatility in the whole COVID-19 period. We find a positive relationship between ESP and volatility only in the early phases of the pandemic. The stronger contraction in earnings and cash flow forecasts for high ESP firms explains the negative effect of ESP on market returns. The cost structure of high ESP firms makes them more exposed to the unexpected global demand shock. Our findings suggest that firm environmental performance did not immunise against market turmoil.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2023 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/). |
Keywords: | COVID-19; Firm environmental performance; Stock returns; Volatility; ESG practices; Market uncertainty |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 12 Jan 2024 15:04 |
Last Modified: | 12 Jan 2024 15:04 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.ribaf.2023.102193 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:207482 |