Are Environmental and Socially Responsible Firms More Resilient? Korean Firms During the COVID‐19 Crash*

Abstract We examine the relationship between firms' environmental and social (ES) performances and their resilience during significant negative shocks. In contrast to prior studies documenting greater resilience among US firms with higher ES scores due to social capital acquisition, we find the opposite trend among Korean firms. Following the COVID‐19 outbreak, firms with higher ES scores exhibited worse stock performances. With more resources allocated toward ES engagement, these firms faced tighter financial and operational constraints, limiting their ability to respond flexibly to adverse shocks. Despite investing more in ES initiatives, Korean firms lacking transparent corporate governance failed to acquire their stakeholders' support.