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COVID‐19, ESG investing, and the resilience of more sustainable stocks: Evidence from European firms
Author(s) -
Cardillo Giovanni,
Bendinelli Ennio,
Torluccio Giuseppe
Publication year - 2023
Publication title -
business strategy and the environment
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.123
H-Index - 105
eISSN - 1099-0836
pISSN - 0964-4733
DOI - 10.1002/bse.3163
Subject(s) - business , market liquidity , sustainability , stock market , externality , covid-19 , stock (firearms) , empirical evidence , psychological resilience , monetary economics , economics , finance , microeconomics , medicine , mechanical engineering , ecology , paleontology , philosophy , psychology , disease , horse , pathology , epistemology , infectious disease (medical specialty) , engineering , psychotherapist , biology
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.