Abstract:

Resilience is at the forefront in companies. Insurance through ESG investment is the focus of much research, yet it has thus far been dominated by a somewhat static approach. We embrace a longitudinal approach by accounting for two aspects of a firm’s ESG engagement: its degree of regularity over time (ESG consistency), and the extent to which each firm reallocates its ESG engagement across pillars (ESG adaptability). We examine how these characteristics affect firm resilience during the COVID-19 shock: stability (the maximum economic loss suffered following the shock), and flexibility (time to recovery). Using a sample of U.S. listed firms, our evidence suggests that ESG consistency and ESG adaptability improve resilience stability, but that they have no significant impact on the flexibility dimension. We further find that such dynamic aspects of ESG become more important vis-à-vis strengthening the resilience of poorer ESG-engaged companies.

Please choose your submission type: Full Paper

Primary Track: Financial Management

Keywords: Corporate Finance

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Dr. Pilar Velasco