Does ESG Investment Influence Firm Risk During the COVID-19 Pandemic? Evidence from European Markets
Seyfullah SelimefendigilIn recent decades, corporate social performance (CSP) has gained in importance. Because of concerns raised by consumers, investors, fund providers, and governmental organizations about sustainability, businesses are motivated to work toward a more sustainable environment. This paper examines the nexus between environmental, social, and governance factors (ESG) and various risk types, including market and accounting-based risk, using a data set comprising 1400 firmyear observations spanning the period from 2015 to 2022 from European countries. It examines both aggregated and disaggregated ESG scores and their associations with accounting-based default risk, measured by Altman’s Z’’ and Zmijewski’s ZM-scores, as well as market risk proxied by beta. To explore the nexus between ESG and risk factors, panel data analysis with both time and unit effects was used and considered with cluster robust standard errors. This study shows that economic cycles have an impact on these relationships, with ESG factors demonstrating a risk-mitigating effect during the COVID-19 pandemic, but no impact before the COVID-19 pandemic. Moreover, this study highlights the comparative informativeness of measuring systematic beta risk compared with traditional accounting-based risk assessments.
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Selimefendigil, S. (2025). Does ESG Investment Influence Firm Risk During the COVID-19 Pandemic? Evidence from European Markets. Istanbul Business Research, 53(3), 409-432. https://doi.org/10.26650/ibr.2024.53.1429651
AMA
Selimefendigil S. Does ESG Investment Influence Firm Risk During the COVID-19 Pandemic? Evidence from European Markets. Istanbul Business Research. 2025;53(3):409-432. https://doi.org/10.26650/ibr.2024.53.1429651
ABNT
Selimefendigil, S. Does ESG Investment Influence Firm Risk During the COVID-19 Pandemic? Evidence from European Markets. Istanbul Business Research, [Publisher Location], v. 53, n. 3, p. 409-432, 2025.
Chicago: Author-Date Style
Selimefendigil, Seyfullah,. 2025. “Does ESG Investment Influence Firm Risk During the COVID-19 Pandemic? Evidence from European Markets.” Istanbul Business Research 53, no. 3: 409-432. https://doi.org/10.26650/ibr.2024.53.1429651
Chicago: Humanities Style
Selimefendigil, Seyfullah,. “Does ESG Investment Influence Firm Risk During the COVID-19 Pandemic? Evidence from European Markets.” Istanbul Business Research 53, no. 3 (Jan. 2025): 409-432. https://doi.org/10.26650/ibr.2024.53.1429651
Harvard: Australian Style
Selimefendigil, S 2025, 'Does ESG Investment Influence Firm Risk During the COVID-19 Pandemic? Evidence from European Markets', Istanbul Business Research, vol. 53, no. 3, pp. 409-432, viewed 19 Jan. 2025, https://doi.org/10.26650/ibr.2024.53.1429651
Harvard: Author-Date Style
Selimefendigil, S. (2025) ‘Does ESG Investment Influence Firm Risk During the COVID-19 Pandemic? Evidence from European Markets’, Istanbul Business Research, 53(3), pp. 409-432. https://doi.org/10.26650/ibr.2024.53.1429651 (19 Jan. 2025).
MLA
Selimefendigil, Seyfullah,. “Does ESG Investment Influence Firm Risk During the COVID-19 Pandemic? Evidence from European Markets.” Istanbul Business Research, vol. 53, no. 3, 2025, pp. 409-432. [Database Container], https://doi.org/10.26650/ibr.2024.53.1429651
Vancouver
Selimefendigil S. Does ESG Investment Influence Firm Risk During the COVID-19 Pandemic? Evidence from European Markets. Istanbul Business Research [Internet]. 19 Jan. 2025 [cited 19 Jan. 2025];53(3):409-432. Available from: https://doi.org/10.26650/ibr.2024.53.1429651 doi: 10.26650/ibr.2024.53.1429651
ISNAD
Selimefendigil, Seyfullah. “Does ESG Investment Influence Firm Risk During the COVID-19 Pandemic? Evidence from European Markets”. Istanbul Business Research 53/3 (Jan. 2025): 409-432. https://doi.org/10.26650/ibr.2024.53.1429651