The bright and dark sides of ESG during the COVID-19 pandemic: evidence from China hospitality industry

Abstract

Purpose This study aims to investigate the bright and dark sides of environmental, social and governance (ESG) during the COVID-19 pandemic, including both the outbreak and recovery periods, for the Chinese hospitality industry. Design/methodology/approach Using panel data of 564 firm-quarter observations from 2018 to 2020, the authors adopt fixed-effects regression estimation with standard errors clustered at the firm level. To address potential endogeneity concerns, the authors also use the two-stage least squares estimator with instrumental variables. Findings The results suggest that ESG plays different roles in market- and accounting-based performance during the COVID-19 outbreak and recovery periods. Specifically, ESG practices show a bright side as a reputation builder to mitigate the negative pandemic impact on market-based performance, whereas the dark side of ESG practices consumes firm resources to aggravate the negative pandemic impact on accounting-based performance during the coronavirus outbreak. These results also suggest hospitality companies benefit bountifully from ESG practices during the COVID-19 recovery. Practical implications ESG plays a vital role for hospitality firms by providing insurance-like protection during and after the COVID-19 outbreak. Additionally, hospitality firms should evaluate their capability to adapt resource-consuming ESG practices. Originality/value Existing hospitality COVID-19 studies have investigated the effect of ESG on firm performance within a short period with mixed results. This study extends the literature by showing the different effects of ESG practices on market- and accounting-based performance during the COVID-19 outbreak and recovery periods.

How ESG Reporting Effects on Green Credit , Green Investment : Moderating Role of Growth Sales

“…The total number of board meetings, firm size, leverage, board independent) to check the magnitude of impact on ESG REPORTING. Numerous studies have used these variables for firm performance, among them, (Arayssi & Jizi, 2023;Bilyay-Erdogan & Öztürkkal, 2023;Lewellyn & Muller-Kahle, 2023;Lin et al, 2023;Rahman et al, 2023;Rauf et al, 2021;. Finally, we incorporated year dummies to control for the possible influence of time, as well as industry dummies to account for the unique effect of industry.…”