COVID-19 IMPACT ON COMPANIES WITH SUSTAINABILITY PRACTICES: AN EVENT STUDY
DOI:
https://doi.org/10.22478/ufpb.2318-1001.2022v10n3.61280Abstract
Objective: This study aims to compare share´s performance of companies listed in the Corporate Sustainability Index (ISE) portfolio with those participating of traditional segment of Brasil, Bolsa, Balcão (B3).
Fundamentals: According to the Market Efficiency theory, securities are priced correctly, reflecting all available information available about them. Share´s expected return is explained by the market risk associated with the company. Thus, for those that adopt ESG practices, it is expected that any gain will be priced when their risks are mitigated. Such arguments support hypothesis (H1) that companies which adopt sustainable practices have a higher return than others that don´t.
Method: This analysis is done by an event study, considering the date of the first official death by Covid-19 in Brazil on March 15, 2020.
Results: Cumulative abnormal return are negative for both subsamples. However, the average for ISE companies is -1.28%, while the traditional segment ones have an average of -10.15%. Thus, it can be state that the companies that adopt ESG practices present a result 8.87% statistically significant and superior to those that don´t. According to t test, this difference is statistically significant, confirming H1 of this study.
Contributions: This study contributes to the analysis of the impact of adopting ESG practices in Brazil - during Covid-19, as well as in emerging markets and economies.
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