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

Chensong Zhou (School of Economics and Management, East China Jiaotong University, Nanchang, China)
Kuo Wang (College of Finance and Statistics, Hunan University, Changsha, China)
Ruixin Liu (School of Accounting, Guangdong University of Finance and Economics, Guangzhou, China)
Ao Shu (Business School, Hunan University, Changsha, China) (Financial Development and Credit Management Research Center, Hunan University, Changsha, China)
Dailing Wang (Financial Development and Credit Management Research Center, Hunan University, Changsha, China)

Journal of Accounting Literature

ISSN: 0737-4607

Article publication date: 30 September 2024

37

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.

Keywords

Acknowledgements

We thank two anonymous referees and the editor for helpful comments. We acknowledge financial support from the National Natural Science Foundation of China (grant no. 72403084) and the Ministry of Education’s Key Areas Supply and Demand Matching Employment and Education Project (grant no. 2024011120773). We are responsible for any remaining errors.

Authors are equally contribued to this research.

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

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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