Impact of ESG ratings on Chinese market performance during the COVID-19 crisis

Abstract

Purpose

This study investigates the role of environmental, social and governance (ESG) policies in enhancing the resilience of Chinese firms during the COVID-19 crisis. By analyzing data from over 3,069 publicly listed companies, the research aims to elucidate the impact of robust ESG practices on stock market performance and operational outcomes during economic disruptions.

Design/methodology/approach

Using a dataset comprising ESG scores and financial performance metrics of Chinese firms, we conduct an empirical analysis to assess the correlation between ESG practices and corporate resilience during the COVID-19 pandemic. The study focuses on evaluating the individual contributions of the social and governance components to overall firm performance.

Findings

The analysis reveals that firms with higher ESG scores, especially in social and governance aspects, exhibit superior stock market performance and operational outcomes during the pandemic. Companies with strong governance mechanisms demonstrate more pronounced benefits, including better long-term sales growth and return on equity (ROE). The findings highlight the critical role of ESG policies in ensuring corporate stability and competitive advantage during crises.

Originality/value

This article provides a comprehensive overview of the impact of corporate ESG ratings on corporate trust and offers a detailed discussion on the protective role of ESG/CSR on firm value during crises, thus providing an original literature contribution.

Citation

Zhou, C., Wang, K., Liu, R., Shu, A. and Wang, D. (2024), "Impact of ESG ratings on Chinese market performance during the COVID-19 crisis", Journal of Accounting Literature, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JAL-05-2024-0095