ESG Impacts on Corporation’s Fundamental: Studies from the Healthcare Industry

Qingquan Tony Zhang (), Beibei Li () and Danxia Xie
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Qingquan Tony Zhang: University of Illinois Urbana-Champaign
Beibei Li: Carnegie Mellon University

Chapter Chapter 13 in Alternative Data and Artificial Intelligence Techniques, 2022, pp 251-275 from Palgrave Macmillan

Abstract: Abstract This chapter investigates the impacts of the ESG factors onto Corporates’ fundamental aspects using healthcare industry as a case study. It first uses the difference-in-difference method to assess COVID-19’s effect on the pharmaceutical industry. The results show that the epidemic-related companies have a significant positive performance in ROA/ROE, compared to the energy and bio-manufacturing companies. It then examines the correlation between the ESG factors and the companies’ economic performance. The fixed effects regression suggests there is a significant negative relationship between total greenhouse emissions and ROA/ROE. Finally, using the generated ESG scores, we constructed an investing strategy in which they buy the ten highest rated companies’ stocks, and short the bottom ten rated companies’ stocks within the portfolio. The outcome shows that for 75% of the time period (excluding the period 2017–2018), the portfolio outperformed the control group in which we bought stocks randomly.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:pal:psircp:978-3-031-11612-4_13

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DOI: 10.1007/978-3-031-11612-4_13

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