The effect of environmental, social and governance risks

This study examines the effect of environmental, social and governance risks on firm value. We analyze the extent to which environmental, social and governance related news affect tourism firms' abnormal returns using event study methodology. The results show that environmental, social and governance related news releases do not significantly affect firm value in the shortterm. We further investigate the effect of environmental, social and governance risks on the value of tourism firms during the recent pandemic utilizing difference-in-differences analysis. The results provide robust evidence that sustainable business practices provide higher resilience to pandemic-like external shocks. Also, the presence of a sustainability committee mitigates the adverse effects of environmental, social and governance risks on firm value. Theoretical and practical implications are discussed.(c) 2022 Elsevier Ltd. All rights reserved.

Automated summary

This study examines the impact of environmental, social, and governance risks on the value of tourism firms. The analysis shows that short-term news releases related to these risks do not significantly affect firm value. However, during the recent pandemic, sustainable business practices and the presence of a sustainability committee contribute to higher resilience and mitigate the adverse effects on firm value.