The concept of ESG investing has recently gained significant attention among investors. Prior studies had inconclusive findings on the relationship between CSR and firm’s performances. Classical shareholder theory views CSR as a donation from a firm’s shareholders to stakeholders.
In the beginning of 2020, the spread of COVID-19 led to global market crashes. In the US, the S&P500 Index fell by almost 30%. The rapid spreading of virus left the firms limited time and ability to respond, sparking the interest to investigate whether ESG investing would be effective during crashes induced by COVID-19.
