ESG and Stock Market Performance in Wellness and Tourism Industries: Evidence from China

This paper examines the relationship between ESG scores and the capital market performance of Chinese publicly listed companies in the wellness and tourism industries. Our empirical results show that these firms’ ESG scores can significantly affect the return level and deviation of their equity issues in the capital market. In the wellness and tourism sectors, companies with higher ESG, risk, and governance scores tend to have higher stock returns. On the other hand, if companies improve their ESG, management, and governance scores, the standard deviation of their returns will go down. Furthermore, we employ the Granger causality test to investigate whether ESG scores and capital market performance Granger cause one another or each other significantly. The test results show that wellness and tourism companies could always improve their stock market performance by raising their ESG scores. Better capital market performance in turn gives strong support for companies’ ongoing commitment to ESG efforts and results.