{"id":1229,"date":"2020-09-08T18:51:22","date_gmt":"2020-09-08T16:51:22","guid":{"rendered":"https:\/\/eaa-online.org\/arc\/blog\/blog\/esg-fails-immunize-stocks-against-covid-19-market-crash\/"},"modified":"2020-09-08T18:51:22","modified_gmt":"2020-09-08T16:51:22","slug":"esg-fails-immunize-stocks-against-covid-19-market-crash","status":"publish","type":"post","link":"https:\/\/eaa-online.org\/arc\/blog\/2020\/09\/08\/esg-fails-immunize-stocks-against-covid-19-market-crash\/","title":{"rendered":"ESG fails to immunize stocks against the COVID-19 market crash"},"content":{"rendered":"<p><span style=\"font-family:arial,helvetica,sans-serif;\"><strong>Environmental, Social and Governance<\/strong> (<strong>ESG<\/strong>) investments are praised worldwide as the solution to environmental, social and societal problems, and would be the best vaccine during the Covid-19 crisis. Our research findings suggest that this is not the case, and that traditional measures such as liquidity and innovative capacity better describe crisis resilience. While corporate social responsibility companies may benefit in the longer term, it is advisable for investors to be critical of funds that promote &#39;ESG&#39; as a crisis vaccine in the short term. &nbsp;<\/span><\/p>\n<p><span style=\"font-family:arial,helvetica,sans-serif;\">Although institutional investors, fund managers and the international financial press often claim otherwise, ESG factors do not lead to better stock market performance in times of crisis. An analysis among 1,600 U.S. companies shows that a higher ESG performance does not make companies more resilient to the negative stock market impact of the corona pandemic. Sustainable investors appear to perform even worse during periods of stock market recovery.<\/span><\/p>\n<p><span style=\"font-family:arial,helvetica,sans-serif;\">We also show that ESG investments only account for 1% of the stock market returns of companies during the Covid crisis. ESG also has no predictive value for how a company will perform in the event of a subsequent crisis, in contrast to &#8211; again &#8211; the combination of financial flexibility and innovative power of a company (both measured from a company&#39;s financial statements), and traditional risk, industry and growth factors. Our study has implications for investors and enforcement agencies, including SEC and European corporate reporting watchdogs.&nbsp;<\/span><\/p>\n<p>Further readings:<\/p>\n<p>SSRN link:&nbsp;<a href=\"https:\/\/uwaterloo.ca\/school-of-accounting-and-finance\/people-profiles\/elizabeth-demers\">Demers, Elizabeth<\/a>&nbsp;and Hendrikse, Jurian and&nbsp;<a href=\"https:\/\/www.tilburguniversity.edu\/staff\/philjoos\">Joos, Philip<\/a>&nbsp;and&nbsp;<a href=\"http:\/\/people.stern.nyu.edu\/blev\/\">Lev, Baruch Itamar<\/a>, ESG Didn&rsquo;t Immunize Stocks In the COVID-19 Crisis, But Investments in Intangble Assets Did (Journal of Business Finance &amp; Accounting, 2021 <em>forthcoming<\/em>). Available at SSRN:&nbsp;<a href=\"https:\/\/ssrn.com\/abstract=3675920\">https:\/\/ssrn.com\/abstract=3675920<\/a>&nbsp;&nbsp;or&nbsp;<a href=\"http:\/\/dx.doi.org\/10.2139\/ssrn.3675920\">&nbsp;http:\/\/dx.doi.org\/10.2139\/ssrn.3675920<\/a><\/p>\n<p>Harvard Law School blog: <a href=\"https:\/\/corpgov.law.harvard.edu\/2020\/09\/08\/esg-didnt-immunize-stocks-against-the-covid-19-market-crash\/\">https:\/\/corpgov.law.harvard.edu\/2020\/09\/08\/esg-didnt-immunize-stocks-against-the-covid-19-market-crash\/<\/a><\/p>\n<p>Financial Times Moral Money discussion: <a href=\"https:\/\/www.ft.com\/content\/57911840-599b-420f-be5a-956bb949929b\">https:\/\/www.ft.com\/content\/57911840-599b-420f-be5a-956bb949929b<\/a><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Environmental, Social and Governance (ESG) investments are praised worldwide as the solution to environmental, social and societal problems, and would be the best vaccine during the Covid-19 crisis. Our research findings suggest that this is not the case, and that traditional measures such as liquidity and innovative capacity better describe crisis resilience. While corporate social [&hellip;]<\/p>\n","protected":false},"author":19,"featured_media":1230,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0},"categories":[1],"tags":[2],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>ESG fails to immunize stocks against the COVID-19 market crash - ARC<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"ESG fails to immunize stocks against the COVID-19 market crash - ARC\" \/>\n<meta property=\"og:description\" content=\"Environmental, Social and Governance (ESG) investments are praised worldwide as the solution to environmental, social and societal problems, and would be the best vaccine during the Covid-19 crisis. Our research findings suggest that this is not the case, and that traditional measures such as liquidity and innovative capacity better describe crisis resilience. 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He also teaches at the TIAS School for Business and Society in Tilburg, the Netherlands. He earned his Ph.D. in Accounting from Stanford University and has extensive research interests in empirical financial accounting, with a recent focus on the economic impacts of ESG information. Philip has published in several top academic journals. He has held the role of President of the European Accounting Association in 2017-19, was co-founder of the EAA ARC, and first chair of the EAA Education Committee.\",\"sameAs\":[\"https:\/\/www.tilburguniversity.edu\/webwijs\/show\/philjoos\/\",\"www.linkedin.com\/in\/philip-joos-0624385\"],\"url\":\"https:\/\/eaa-online.org\/arc\/blog\/members\/19\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"ESG fails to immunize stocks against the COVID-19 market crash - ARC","robots":{"index":"noindex","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"og_locale":"en_US","og_type":"article","og_title":"ESG fails to immunize stocks against the COVID-19 market crash - ARC","og_description":"Environmental, Social and Governance (ESG) investments are praised worldwide as the solution to environmental, social and societal problems, and would be the best vaccine during the Covid-19 crisis. 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