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ESG practices and corporate financial performance: Evidence from the airline industry during the Russian-Ukrainian war

Author

Listed:
  • Yao Xie

    (Morningstar Inc.)

  • Sang Baum Kang

    (Illinois Institute of Technology)

  • Jialin Zhao

    (St. Mary''s University)

Abstract

This paper investigates the impact of Environmental, Social, and Governance (ESG) performance on airlines' financial outcomes during the Russian–Ukrainian war, employing a Difference-in-Differences (DiD) approach. We focus on the airline industry due to its competitiveness and pronounced exposure to geopolitical risks. Our DiD analysis reveals that European airlines, which are more directly affected by the conflict, experienced significantly greater post-war losses than their non-European counterparts. However, firms with higher ESG scores exhibited stronger resilience, mitigating the war's adverse effects. These findings offer novel evidence that robust ESG practices can help firms and investors navigate non-hedgeable geopolitical crises.

Suggested Citation

  • Yao Xie & Sang Baum Kang & Jialin Zhao, 2025. "ESG practices and corporate financial performance: Evidence from the airline industry during the Russian-Ukrainian war," Economics Bulletin, AccessEcon, vol. 45(3), pages 1421-1430.
    • Handle: RePEc:ebl:ecbull:eb-25-00164
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    File URL: http://www.accessecon.com/Pubs/EB/2025/Volume45/EB-25-V45-I3-P121.pdf
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    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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