The role of ESG factors in mitigating crisis effects on Moroccan public companies’ financial performance

Abstract

Starting from late 2019, the global COVID-19 outbreak has led countries to impose repetitive lockdowns to prevent citizens from its spread and preserve their health. This health crisis has quickly turned into an economic crisis affecting global macroeconomic indicators and by extrapolation worldwide stock markets performance. Since Environmental, Social and Governance (ESG) factors have been appraised by literature in developed countries for their positive effects on companies, this paper is aimed at studying whether ESG factors have had a role in mitigating the Moroccan stock market crash on the financial performance of ESG compliant listed in the Casablanca Stock Exchange (CSE). This study was conducted based on an event study methodology using the daily stock returns of the 10 companies constituting the CESG10 Index as of January 2022. Our findings suggest that, although ESG companies have proven to outperform the market in developed countries, this positive effect is not to be automatically extrapolated to developing countries as the ESG umbrella did not have a significant role in mitigating the crisis effect on the stock performance of Moroccan public companies.