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The role of ESG performance in firms' resilience during the COVID-19 pandemic: Evidence from Nordic firms

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  • Yahya, Habeeb

Abstract

Firms' corporate social responsibility and environmental sustainability issues have been documented to provide a competitive advantage that enhances financial performance, especially in tightened economic situations. Similarly, studies on countries' economic performance during the COVID-19 pandemic show a significant effect of movement restriction (lockdown) as a spread-containment strategy. This paper analyses the exogenous effect of lockdown on firm performance during the COVID-19 pandemic and the role of firms' sustainability in resilience to the pandemic. This study uses a difference-in-differences analysis on data of publicly listed Nordic firms, showing a positive and significant difference in revenue and profitability for firms listed in lockdown countries compared with those in the country without a lockdown. Further analysis shows that sustainability provides resilience for firms during the COVID-19 pandemic, as firms' environmental and social performances are positively related to revenue, profitability, and valuation. This finding supports the conclusion that customer and investor preferences enhance sustainable firms' performance.

Suggested Citation

  • Yahya, Habeeb, 2023. "The role of ESG performance in firms' resilience during the COVID-19 pandemic: Evidence from Nordic firms," Global Finance Journal, Elsevier, vol. 58(C).
    • Handle: RePEc:eee:glofin:v:58:y:2023:i:c:s104402832300100x
    DOI: 10.1016/j.gfj.2023.100905
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    More about this item

    Keywords

    ESG; Financial performance; Firm valuation; Lockdown; COVID-19; Nordic countries;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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