Does ESG Disclosure Transparency Help Mitigate the COVID-19 Pandemic Shock? An Empirical Analysis of Listed Firms in the UK

Abstract

This paper examines whether the transparency in ESG reporting helps listed firms in the UK better mitigate the impact of the COVID-19 pandemic. We investigate 179 listed firms from August 2019 to May 2020. The results show that the performance spread of firms with high ESG disclosure score is less negatively impacted by firm internal and external factors during the COVID-19 pandemic. Furthermore, the ESG transparency helps reduce the volatility. However, we find no evidence that the ESG reporting transparency helps improve the stock performance. Therefore, ESG reporting transparency helps firms better resist to extreme shocks like the COVID-19 pandemic.

Keywords: ESG disclosure; Transparency; COVID-19 pandemic; Performance spread; Investor sentiment

JEL Classification: G3