Using the exogenous Covid-19 shock to the Korean stock market as a natural experiment, we examine the relationship between ES performance and stock returns surrounding the Covid-19 panic period. We find that socially responsible firms experienced greater declines in their stock prices during the panic period and slower recoveries in the subsequent post-panic period. Our findings contradict the dominant view in the relevant literature ? the value-enhancing ESG view. We present further evidence that the negative relationship between firms’ ES performance and panic returns can be attributed to alternative explanations based on financial and operating leverages of socially responsible firms.