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Is COVID-19 Related Anxiety an Accelerator for Responsible and Sustainable Investing ? A Sentiment Analysis

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  • Refk Selmi
  • Shawkat Hammoudeh
  • Youssef Errami
  • Mark E. Wohar

Abstract

The excessive volatility generated by the COVID-19 pandemic highlights that environmental and social issues are potential elements that businesses and governments must manage effectively and swiftly. This study seeks to test whether the rising anxiety over this pandemic has affected the attitudes and choices towards environmentally and socially responsible investing. To this end, we first use machine learning tools to examine tweets related to this unprecedented and wild shock. Second, we compare the impact of these sentiments on the stock performance of companies from the S&P500 that meet environmental and social sustainability criteria for three COVID-19 phases with varying levels of anxiety, which we label incubation, fever and the increasing risk of second wave pandemic (in the absence of vaccine). Our findings reveal that the increasing uncertainty and worries over COVID-19 and its consequences has not distracted investors’ attention away from environmental and social issues, but companies with responsible strategies on environmental issues that specifically address climate responsibility are likely to be more responsive to sentiments at the current situation of emergency.

Suggested Citation

  • Refk Selmi & Shawkat Hammoudeh & Youssef Errami & Mark E. Wohar, 2021. "Is COVID-19 Related Anxiety an Accelerator for Responsible and Sustainable Investing ? A Sentiment Analysis," Applied Economics, Taylor & Francis Journals, vol. 53(13), pages 1528-1539, March.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:13:p:1528-1539
    DOI: 10.1080/00036846.2020.1834501
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    Cited by:

    1. Khyati Kathuria & Nand Kumar, 2022. "Pandemic‐induced fear and government policy response as a measure of uncertainty in the foreign exchange market: Evidence from (a)symmetric wild bootstrap likelihood ratio test," Pacific Economic Review, Wiley Blackwell, vol. 27(4), pages 361-379, October.
    2. Refk Selmi, 2023. "Do investors care about carbon risk? The impact of the Paris agreement on the inflation hedging performance of commodities," Economics Bulletin, AccessEcon, vol. 43(2), pages 1111-1121.
    3. Rocco Caferra & Pasquale Marcello Falcone & Andrea Morone & Piergiuseppe Morone, 2022. "Is COVID-19 anticipating the future? Evidence from investors’ sustainable orientation," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 177-196, March.
    4. Jing Lu & Kathleen Rodenburg & Lianne Foti & Ann Pegoraro, 2022. "Are firms with better sustainability performance more resilient during crises?," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3354-3370, November.

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