A Green Wave in Media: A Change of Tack in Stock Markets

Marie Bessec and Julien Fouquau
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Julien Fouquau: LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper examines the impact of environmental news coverage in US newspapers on stock markets. Using textual analysis with a dictionary-based approach, we obtain several measures of attention, tonality and uncertainty in the coverage of environmental news in major US newspapers. We consider different weighting schemes to account for the visibility and relevance of the text sources, and several sets of newspapers to measure the possible impact of their editorial line. Our results show that greater attention to environmental news in the US media reduced the excess returns of carbon-intensive stocks and increased their volatility over the last decade, especially when the coverage was uncertain. The opposite result holds for the most virtuous green assets. Restricting the corpus of texts to conservative newspapers mitigates the impact of coverage. Overall, our results illustrate how rising environmental concerns lead investors to change their asset allocation.

Keywords: Green finance; Climate change; Investor sentiment; Media coverage; Textual analysis (search for similar items in EconPapers)
Date: 2024
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Published in Oxford Bulletin of Economics and Statistics, 2024, 86 (5), pp.1026-1057. ⟨10.1111/obes.12597⟩

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Journal Article: A Green Wave in Media: A Change of Tack in Stock Markets (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04706501

DOI: 10.1111/obes.12597

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