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Measuring the impact of ESG investing on the stock performance of JSE-listed financial service providers during the Covid-19 pandemic

Author

Listed:
  • Khwazi Magubane

    (Economic Sciences, North-West University, 1174 Hendrick Van Eck Boulevard, Vanderbijlpark, 1900, South Africa)

  • Boingotlo Wesi

    (Economic Sciences, North-West University, 1174 Hendrick Van Eck Boulevard, Vanderbijlpark, 1900, South Africa)

Abstract

The study's objective is to examine the impact of ESG investing on the stock performance of financial service providers in South Africa (SA) during the COVID-19 pandemic. This has significant ramifications for the usefulness of ESG investing during a crisis period. To this end, the study employs the panel nonlinear autoregressive distributed lags (PNARDL). The study finds that ESG investing had a significant impact on stock performance. The error term in the PNARDL reveals that the share price of financial service providers in SA was significantly affected by ESG investing. The PNARDL shows that, on average, a 1 percent increase in ESG investing increased stock price returns by 5 percent, cetiris paribus. This crucial finding has significant implications. It implies that ESG was another significant resilience factor behind the stock performance of financial service providers. Moreover, the PNARDL found that reducing ESG investing negatively affected stock price returns, while increasing ESG investing positively affected stock price returns during COVID-19. Hence, the study recommends that financial service providers increase ESG investing during a crisis period. Key Words:ESG, Stock Performance, JSE, Financial Services, Covid-19, Pandemic

Suggested Citation

  • Khwazi Magubane & Boingotlo Wesi, 2023. "Measuring the impact of ESG investing on the stock performance of JSE-listed financial service providers during the Covid-19 pandemic," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 12(9), pages 303-312, December.
    • Handle: RePEc:rbs:ijbrss:v:12:y:2023:i:9:p:303-312
    DOI: 10.20525/ijrbs.v12i9.3069
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