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COVID‐19, ESG investing, and the resilience of more sustainable stocks: Evidence from European firms

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  • Giovanni Cardillo
  • Ennio Bendinelli
  • Giuseppe Torluccio

Abstract

Following the COVID‐19 outbreak, orientation toward sustainability is a critical factor in ensuring firm survival and growth. Using a large sample of 1,204 firms in Europe during the year 2020, this study investigates how more sustainable firms fare during the pandemic compared with other firms in terms of risk–return trade‐off and stock market liquidity. We also highlight the drivers of the resilience of more sustainable firms to the pandemic. Particularly, we document that higher levels of cash holdings and liquid assets in the pre‐COVID period help these firms to perform and absorb the COVID‐19 externalities better than other firms. Our results are robust to a host of econometric models, including GMM estimations and several measures of stock market performance. These findings contribute to the theoretical and empirical debate on the role of the sustainability as a source of corporate resilience to unexpected shocks.

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  • Giovanni Cardillo & Ennio Bendinelli & Giuseppe Torluccio, 2023. "COVID‐19, ESG investing, and the resilience of more sustainable stocks: Evidence from European firms," Business Strategy and the Environment, Wiley Blackwell, vol. 32(1), pages 602-623, January.
    • Handle: RePEc:bla:bstrat:v:32:y:2023:i:1:p:602-623
    DOI: 10.1002/bse.3163
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    Cited by:

    1. Riccardo Savio & Edoardo D’Andrassi & Francesca Ventimiglia, 2023. "A Systematic Literature Review on ESG during the COVID-19 Pandemic," Sustainability, MDPI, vol. 15(3), pages 1-17, January.
    2. Radu Herman & Cornelia Nistor & Nicolae Marius Jula, 2023. "The Influence of the Increase in Energy Prices on the Profitability of Companies in the European Union," Sustainability, MDPI, vol. 15(21), pages 1-16, October.
    3. Rudkin, Wanling & Cai, Charlie X., 2023. "Information content of sustainability index recomposition: A synthetic portfolio approach," International Review of Financial Analysis, Elsevier, vol. 88(C).

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