The bright and dark sides of ESG during the COVID-19 pandemic: evidence from China hospitality industry
International Journal of Contemporary Hospitality Management
ISSN: 0959-6119
Article publication date: 21 June 2023
Issue publication date: 23 February 2024
Abstract
Purpose
This study aims to investigate the bright and dark sides of environmental, social and governance (ESG) during the COVID-19 pandemic, including both the outbreak and recovery periods, for the Chinese hospitality industry.
Design/methodology/approach
Using panel data of 564 firm-quarter observations from 2018 to 2020, the authors adopt fixed-effects regression estimation with standard errors clustered at the firm level. To address potential endogeneity concerns, the authors also use the two-stage least squares estimator with instrumental variables.
Findings
The results suggest that ESG plays different roles in market- and accounting-based performance during the COVID-19 outbreak and recovery periods. Specifically, ESG practices show a bright side as a reputation builder to mitigate the negative pandemic impact on market-based performance, whereas the dark side of ESG practices consumes firm resources to aggravate the negative pandemic impact on accounting-based performance during the coronavirus outbreak. These results also suggest hospitality companies benefit bountifully from ESG practices during the COVID-19 recovery.
Practical implications
ESG plays a vital role for hospitality firms by providing insurance-like protection during and after the COVID-19 outbreak. Additionally, hospitality firms should evaluate their capability to adapt resource-consuming ESG practices.
Originality/value
Existing hospitality COVID-19 studies have investigated the effect of ESG on firm performance within a short period with mixed results. This study extends the literature by showing the different effects of ESG practices on market- and accounting-based performance during the COVID-19 outbreak and recovery periods.
Keywords
Acknowledgements
Yongjia Lin appreciates the financial support from the Faculty Research Grant of Macau University of Science and Technology [Grant reference no.: FRG-22–014-MSB]. Zhen Zheng appreciates the financial support from the National Social Science Fund of China (22CGL062).
Citation
Lin, Y., Lu, Z., Fan, D. and Zheng, Z. (2024), "The bright and dark sides of ESG during the COVID-19 pandemic: evidence from China hospitality industry", International Journal of Contemporary Hospitality Management, Vol. 36 No. 4, pp. 1393-1417. https://doi.org/10.1108/IJCHM-11-2022-1384
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited