Financial performance of emerging market companies during the COVID-19 pandemic: moderating role of sustainability performance

What is it about?

This study aims to investigate whether sustainability performance (SP) served as a safeguard for firm profitability (FP) and enhances corporate resilience in emerging markets during the COVID-19 pandemic. Using a sample of 1091 firms in 25 emerging markets from 2017 to 2021, this study analyses the moderating role of SP on the relationship between FP and COVID-19 by employing hierarchical linear modelling at three levels: (a) time-level; (b) firm-level; (c) country-level. The results indicate that during the years 2020–2021, emerging market firms with robust SP showed better FP in the midst of the COVID-19 pandemic. The findings also indicate that all dimensions of sustainability, i.e. environmental, social and governance (ESG), have significantly affected the FP in the post-COVID period. Hence, adhering to ESG principles aids in alleviating adverse financial repercussions during times of crises.

Featured Image