Proceedings of the 9th International Conference on Research in Business, Management and Economics
Year: 2024
DOI:
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The Nexus of Financial Performance and ESG Scores in Emerging Asian Markets: Evidence from The Covid-19 Pandemic
Dika Lirisanti, Zaäfri Ananto Husodo
ABSTRACT:
This study investigates the interconnectedness of stock returns, risks, and ESG (Environmental, Social, and Governance) scores in emerging Asian markets during the COVID-19 pandemic, aiming to contribute to the understanding of sustainable investing practices in volatile economic climates. Using panel data from Refinitiv Eikon for March 2019 to March 2022, the research examines the influence of financial performance, including returns and risks, along with control variables such as Excess Market Return, SMB, HML, and Liquidity, on ESG scores. The study employs a robust methodology, including descriptive analysis, correlation analysis, and regression analysis, to assess the multifaceted relationship between financial performance and ESG metrics. The findings indicate that financial performance differentially impacts ESG scores, with social factors emerging as the most significant ESG component. This suggests that companies prioritizing employee relations, community engagement, and human rights practices exhibit stronger financial performance during crises. These results underscore the complex relationship between financial performance and ESG metrics during crises, particularly in lessdeveloped markets, highlighting the need for nuanced and context-specific considerations in ESG integration and sustainable investing practices. The study’s findings have implications for investors, policymakers, and corporate leaders seeking to navigate the complexities of ESG adoption and enhance the resilience of financial markets in emerging economies.
keywords: Covid-19; Emerging Asian Markets; ESG Scores; Financial Performance; Risk; Stock Returns