Reconsidering systematic factors during the Covid-19 pandemic – The rising importance of ESG

Diaz, V. J. R.; Ibrushi, Denada; Zhao, Jialin

doi:10.1016/j.frl.2020.101870

Cited by 116 publications

(81 citation statements)

References 14 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…The purpose may also be to reassure markets and in so doing enable the firm to raise funds at a lower cost (Sharfman and Fernando, 2008) or generating a new form of goodwill or moral capital that protect many of the firm’s relationship-based intangible assets, providing shareholders with insurance-like protection (Godfrey, 2005). Moreover, several studies showed recently that CSR/ESG strategies pay off in time of crisis, especially in the last Covid-19 stock market crisis of February–March 2020 (Albuquerque et al , 2020; Cheema-Fox et al , 2020; Broadstock et al , 2021; Diaz et al , 2021), confirming that investors reward companies demonstrating commitment for stakeholders, and thus, resiliency in such periods.…”

Section: Theoretical Framework and Research Hypothesesmentioning

confidence: 89%

Corporate social performance (CSP) in time of economic crisis

Cassely

Larbi

Revelli

et al. 2021

SAMPJ

View full text Add to dashboard Cite

Purpose This study aims to compare the different effects of the 2008 economic crisis on companies’ corporate social performance (CSP) in coordinated market economies (CMEs) and liberal market economies (LMEs). Design/methodology/approach This paper mobilizes a pluralistic theoretical framework that borrows from neo-institutional and corporate governance theories to compare the impacts of the 2008 economic crisis on long-term CSP in an international context. Based on the longitudinal database of Vigeo Eiris (2004–2015), the panel was decomposed between two models of capitalism (LME and CME). For each model, this paper conducted a series of regressions, taking into account the longitudinal nature of the data using estimates based on generalized estimating equations (Liang and Zeger, 1986). Findings The paper shows that the economic crisis prompted companies operating in LMEs and CMEs to reorient their corporate social responsibility (CSR) practices in quite different ways during the four-year period that the crisis lasted, as well as the succeeding four-year post-crisis period. While CSR was perceived in LMEs as a threat during the crisis period because of the additional costs it generated, it offered CME companies a way of redefining how they relate to the rest of society, with their goal becoming the creation of greater shared value. Research limitations/implications The results are dependent from the data, and specifically from the Vigeo Eiris database. It would be interesting to extrapol this kind of research with the use of other CSP/environmental, social and governance (ESG) databases as Morgan Stanley Capital International, Sustainalytics or RepRisk, to compare and conclude more globally on tendencies. Another limitation relates to the binary nature of Hall and Soskice’s (2001) typology, with its neo-institutionalist inspiration, that puts Continental European and social-democratic models of capitalism on the same plane. Practical implications This study teaches managers, analysts and policymakers that CSR can be a powerful strategic lever capable of remedying the harmful effects that economic crises have in both LMEs and CMEs, notwithstanding the cultural, socio-economic and political differences between these models of capitalism. Economic and social crises must help companies to rethink and revisit their business models and CSR practices to subsequently implement sustainability strategies more in sync with the values forced upon them by the economic systems to which they belonged but also by all their stakeholders. Social implications From a managerial standpoint, this study allows practitioners to consider CSR as an opportunity to rethink their strategy and business models in a period of crisis, and no more a threat that could reduce the economic performance in increasing the costs, and thus, the cost of financing. Originality/value After reading the literature on the topic, this paper clearly thinks about the high degree of contribution of the paper, as the topic is not so developed and that the study implies several contributions. First, from a theoretical level, the study differs from previous research studies insofar as it compares the impacts of the economic crisis on companies’ CSP in CMEs and LMEs using a theoretical framework that operationalizes both contractual and neo-institutional theories. Second, from a methodological standpoint, the approach using an ESG data provider known worldwide (Vigeo Eiris) has not been down yet. Third, on a managerial level, the present study teaches managers, analysts and policymakers that CSR can be a powerful strategic lever capable of remedying the harmful effects that economic crises have in both LMEs and CMEs, notwithstanding the cultural, socio-economic and political differences between these models of capitalism.

show abstract

Section: Theoretical Framework and Research Hypothesesmentioning

confidence: 89%

Corporate social performance (CSP) in time of economic crisis

Cassely

Larbi

Revelli

et al. 2021

SAMPJ

View full text Add to dashboard Cite

show abstract

“…Research in this field also analyzes exchange-traded funds (ETFs) (Folger-Laronde et al , 2020), mutual funds (Döttling and Kim, 2020) and individual firm stocks (Albuquerque et al , 2020; Bae et al , 2020; Broadstock et al , 2020; Demers et al , 2020; Díaz et al , 2020; Mukanjari and Sterner, 2020; Palma-Ruiz et al , 2020; Hoang, 2020; Takahashi and Yamada, 2020). ETFs are financial products like mutual funds but are traded like stocks.…”

Section: Resultsmentioning

confidence: 99%

“…ETFs are financial products like mutual funds but are traded like stocks. Generally, studies provide evidence of the importance of ESG metrics to financial performance (Albuquerque et al , 2020; Broadstock et al , 2020; Díaz et al , 2020; Hoang 2020; Palma-Ruiz et al , 2020). However, four studies did not find a statistically significant correlation between returns and ESG/CSR metrics (Bae et al , 2020; Demers et al , 2020; Folger-Laronde et al , 2020; Mukanjari and Sterner, 2020).…”

Section: Resultsmentioning

confidence: 99%

“…Research in this subsection has been conducted in a broad range of countries. Specifically, empirical evidence has emerged from Canada (Folger-Laronde et al , 2020), the USA (Albuquerque et al , 2020; Bae et al , 2020; Demers et al , 2020; Díaz et al , 2020; Döttling and Kim, 2020), Spain (Palma-Ruiz et al , 2020), the UK (Hoang, 2020), Japan (Takahashi and Yamada, 2020) and China (Broadstock et al , 2020).…”

Section: Resultsmentioning

confidence: 99%

See 1 more Smart Citation

Corporate governance and COVID-19: a literature review

Koutoupis

Kyriakogkonas

Pazarskis

et al. 2021

View full text Add to dashboard Cite

Purpose The purpose of this study is to review the literature on corporate governance (CG); environmental, social and governance (ESG) issues and corporate social responsibility (CSR) during the Coronavirus disease 2019 (COVID-19) pandemic and addresses three research questions: What are the characteristics of the literature on CG and COVID-19? What are the themes in CG in the COVID-19 era? and What are key areas of future research on CG and COVID-19? Design/methodology/approach The authors attempted a systematic literature review of 62 studies published in 2020. The authors used four criteria to identify characteristics of the literature on CG and COVID-19 and three criteria to identify key themes in the literature addressing CG and the pandemic. The authors analyzed answers to the above research questions and proposals from studies reviewed to guide future research. Findings CG in the context of COVID-19 has been studied mostly in developed countries and within a theoretical framework. As accounting data are insufficient, more research is required in all countries (developed, emerging and other). Further, there are no conclusive results regarding the relevance of ESG and CSR to financial performance. Future research should use additional methodologies and data sources to fully explain the impact of COVID-19 on CG. Practical implications Practitioners and policymakers could benefit from the study, as the authors present key challenges to CG for the present and the future. Originality/value This study is the first to provide a systematic literature review on CG during the COVID-19 pandemic and presents current trends, challenges and avenues for future research.

show abstract

“…The market model estimation in COVID-19 context is treated in recent research works. We can cite Diaz et al (2021) and Liu (2020) among others. The modeling approach that we propose in this article can also be applied in this context because it allows exploiting the information available at high frequency and using monthly time series of macroeconomic variables in the multifactor model estimation.…”

Section: Introductionmentioning

confidence: 99%

A fuzzy multifactor asset pricing model

Moussa

Kamdem

2021

Ann Oper Res

View full text Add to dashboard Cite

This paper introduces a new approach of multifactor asset pricing model estimation. This approach assumes that the monthly returns of financial assets are fuzzy random variables and estimates the multifactor asset pricing model as a fuzzy linear model. The fuzzy random representations allows us to incorporate bias on prices induced by the market microstructure noise and to reflect the intra-period activity in the analysis. The application of fuzzy linear regression enables the uncertainty assessment in an alternative way to confidence interval or hypothesis testing, which is subjected the binding assumption of normal distribution of returns. However, it is well known that the distribution of many asset returns deviates significantly from the normal assumption. We illustrate this estimation in the particular case of the Fama and French's (J Financ Econ 33:3-56, 1993) three factor model. Finally, empirical studies based on Fama and French's portfolios and risk factors, historical dataset highlight the effectiveness of our estimation method and a comparative analysis with the ordinary least square estimation shows its ability to be applied for an optimal decision decision making in the financial market.

show abstract

Reconsidering systematic factors during the Covid-19 pandemic – The rising importance of ESG

Cited by 116 publications

References 14 publications

Corporate social performance (CSP) in time of economic crisis

Corporate social performance (CSP) in time of economic crisis

Corporate governance and COVID-19: a literature review

A fuzzy multifactor asset pricing model

Contact Info

Product

Resources

About