Where does corporate social capital matter the most? Evidence From the COVID-19 crisis

Fiordelisi, Franco; Galloppo, Giuseppe; Lattanzio, Gabriele

doi:10.1016/j.frl.2021.102538

Cited by 13 publications

(15 citation statements)

References 22 publications

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“…These results come in line with previous research that indicates ESG as a mitigation mechanism. As a matter of fact, Lins et al (2017) highlight superior returns and abnormal returns during the pure crisis period from August 2008 to March 2009, while Diaz et al (2020) and Fiordelisi et al (2021) confirm such tendency during the pandemic (contingent on institutional settings for the latter researchers' study). Chintrakarn et al (2021) provide additional support in their study on board independence and CSR investments during times of crisis, confirming the instrumental role of ESG practices as risk mitigation tools to respond in shocks that affect the stock and the company.…”

Section: Analysis and Empirical Findingsmentioning

confidence: 85%

“…From an asset pricing perspective, Fiordelisi et al (2021) highlight the effectiveness of corporate social capital, the intangible and tangible resources built through ESG strategies and practices, to ensure stock market returns against systemic shocks, although dependent upon institutional factors. Their results are further confirmed by findings presented by Liagkouras et al (2020) supporting the hedging potential behind ESG considerations in diversification and the booster of taking it international.…”

Section: Can Esg Hold Your Institutional Investors?mentioning

confidence: 99%

“…From an asset pricing perspective, Fiordelisi et al. (2021) highlight the effectiveness of corporate social capital, the intangible and tangible resources built through ESG strategies and practices, to ensure stock market returns against systemic shocks, although dependent upon institutional factors.…”

Section: Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

2008's mistrust vs 2020's panic: can ESG hold your institutional investors?

Giakoumelou

Salvi

Bertinetti

et al. 2022

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PurposeThe authors compare two market collapse incidents, focusing on their role as turning points for ESG considerations among investors that do not fall under the SRI class. The authors draw from the signaling theory to posit that ESG performance acts as a buffer to retain institutional shareholders under stress conditions.Design/methodology/approachThe authors collect extensive data on institutional shareholdings and corporate performance during the pandemic and the 2008 financial crisis to examine the potential of ESG to act as a downward risk hedging mechanism. The authors test whether superior ESG scores function as insurance and resilience signals that lock investors in through times of high probability of divestments.FindingsFindings indicate that ESG weighs in investment decisions during economic downturn and poor returns. The nature of this positive relationship is not static but dynamic contingent on overall risk materiality considerations.Research limitations/implicationsThe authors update regulators, firms, investors and academics on ESG, risk and crisis management. The shifting materiality and the altering impact of ESG practices is our core implication, as well as limitation, in terms of metrics, temporal evolution and interaction with institutional factors, along with portfolio alpha and safe haven potential in ESG asset classes.Originality/valueThe authors extend current literature focusing on portfolio returns and firm valuations to highlight the role of ESG in shareholder retention during poor return periods. The authors further add to existing studies by examining the shifting materiality of ESG pillars during different crisis settings.

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Section: Analysis and Empirical Findingsmentioning

confidence: 85%

Section: Can Esg Hold Your Institutional Investors?mentioning

confidence: 99%

See 1 more Smart Citation

2008's mistrust vs 2020's panic: can ESG hold your institutional investors?

Giakoumelou

Salvi

Bertinetti

et al. 2022

View full text Add to dashboard Cite

show abstract

“…Al-Omoush et al (2020) found a positive impact of social capital in achieving e-business proactiveness and organisational agility during the COVID-19 pandemic. Fiordelisi et al (2021) analysed a sample of 1,789 companies operating in 27 different countries during the first phase of global pandemic crisis, providing empirical evidence that firms with high social capital outperform their peers with low social capital. In addition, they demonstrated that the impact of social capital on stock market returns "depends upon a country's legal framework" (Fiordelisi et al, 2021).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…Fiordelisi et al (2021) analysed a sample of 1,789 companies operating in 27 different countries during the first phase of global pandemic crisis, providing empirical evidence that firms with high social capital outperform their peers with low social capital. In addition, they demonstrated that the impact of social capital on stock market returns "depends upon a country's legal framework" (Fiordelisi et al, 2021). In contrast, Bae et al (2021) failed to find a relationship between social capital and stock returns during the pandemic crisis.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Can sustainable practices protect investors during financial market instability? A multi-sector analysis during the COVID-19 pandemic

Nirino

Petruzzella

Alam

et al. 2022

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PurposeThe aim of this study is to analyse the relationship between firms' sustainable practices and corporate financial performance during the COVID-19 pandemic. Specifically, this study aims to analyse the effect of sustainable practices on firms' stock returns during and after the first COVID-19 pandemic emergency.Design/methodology/approachA quantitative study was conducted to determine the impact of sustainable practices on firms' stock returns, using a sample of 1,418 European listed firms. In particular, we tested the effect of environmental (E) and social (S) scores, providing a multi-sectoral analysis in order to consider sector specificities.FindingsThe empirical outcomes indicate the existence of a negative (weak) or null relationship between sustainable practices and stock returns, failing to provide evidence that these practices are able to protect shareholders value during times of crisis.Practical implicationsThe results obtained made it possible to highlight significant implications for investors and practitioners. They may have particular attention in evaluating firm's sustainable practices trying to understand more precisely the value that such practices can have for the company and its shareholders.Originality/valueThis article is part of the stream of studies that analysed the impact of sustainable practices on stock returns during a period of crisis in order to contribute to filling the gap due to the lack of consensus and the mixed results in the literature.

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Portfolio performance implications of investment in renewable energy equities: Green versus gray

Pizzutilo

Gleason

2023

Corp Soc Responsibility Env

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The Sustainable Development Goals of the United Nation and interest by investors in Environmental, Social and Governance (ESG) investment strategies have caused a rapid shift to the green or renewable energy sector, from traditional or gray (oil, gas, and coal) energy companies. In this study, we examine whether and to what extent, financially speaking, there is a price to pay for investing in renewable energy sector equity. Moreover, we seek to determine whether green investments can be considered a hedge during times of financial stress. We find that alphas from investments in a portfolio of gray (overall energy sector) stocks and versus a portfolio of renewable energy equities during an exogenous, non‐financial shock—the COVID‐19 pandemic—and during non‐crisis periods did not differ statistically. However, the renewable energy index showed higher idiosyncratic volatility than the energy index, as expected. The results are robust to alternative model specifications. From a practical perspective, our results are informative in that they provide insights into the tradeoffs associated with renewable energy investments. In particular, risk‐adjusted returns to a renewable energy portfolio may be affected by greater idiosyncratic risk.

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Where does corporate social capital matter the most? Evidence From the COVID-19 crisis

Cited by 13 publications

References 22 publications

2008's mistrust vs 2020's panic: can ESG hold your institutional investors?

2008's mistrust vs 2020's panic: can ESG hold your institutional investors?

Can sustainable practices protect investors during financial market instability? A multi-sector analysis during the COVID-19 pandemic

Portfolio performance implications of investment in renewable energy equities: Green versus gray

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