The Value Relevance of Financial Performance and ESG Scores During Tumultuous Economic Periods

This paper examines the value relevance of ESG scores (environmental, social and governance) before, during, and after tumultuous economic periods (including the 2008 financial crisis and the COVID−19 pandemic) taking into consideration a company’s financial performance. The analysis, using Ohlson’s price model, is based on a sample of companies listed on European stock exchanges from 2003 to 2021. The results underline that, after each tumultuous economic period, there was a decline in the value relevance of ESG scores and an increase in investor focus on company financial performance.