Does every cloud (bubble) have a silver lining? An investigation of ESG financial markets

Matteo Foglia and Federica Miglietta

Journal of Behavioral and Experimental Finance, 2024, vol. 42, issue C

Abstract: This paper investigates the presence of financial bubbles in the environmentally friendly investments captured by the ESG markets. By using the log-periodic power law singularity framework, we identified several periods of positive and negative bubbles in the short, medium, and long term. Moreover, we examined the relationship between ESG attention sentiment and financial bubbles. We found an asymmetric effect of ESG sentiment on financial bubbles, i.e., increasing positive and decreasing negative bubbles. Our empirical results provide valuable insights into the stability of environmentally friendly markets, which help risk managers and policymakers respond appropriately to financial and social bubbles.

Keywords: ESG; Sentiment; Financial bubble; Social bubble hypothesis; Capital markets; Log-periodic power law singularity; Climate performance (search for similar items in EconPapers)
JEL-codes: G10 G14 G41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:42:y:2024:i:c:s2214635024000431

DOI: 10.1016/j.jbef.2024.100928

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