The Impact of Uncertain Welfare Quality on Equity Market Performance

Tarek Eldomiaty (), Islam Azzam, Hoda El Kolaly, Nermeen Youssef, Marwa Anwar Sedik and Rehab ElShahawy
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Tarek Eldomiaty: Onsi Sawiris School of Business, The American University in Cairo, AUC Avenue, P.O. Box 74, New Cairo 11835, Egypt
Islam Azzam: Onsi Sawiris School of Business, The American University in Cairo, AUC Avenue, P.O. Box 74, New Cairo 11835, Egypt
Hoda El Kolaly: Onsi Sawiris School of Business, The American University in Cairo, AUC Avenue, P.O. Box 74, New Cairo 11835, Egypt
Nermeen Youssef: Faculty of Business, Economics and Political Science, The British University in Egypt, P.O. Box 43, Cairo 11837, Egypt
Marwa Anwar Sedik: Faculty of Business Administration & International Trade, Misr International University, Al Obour 19648, Egypt
Rehab ElShahawy: School of Business Administration, Canadian International College in Cairo, CIC Avenue, P.O. Box 59, New Cairo 11241, Egypt

IJFS, 2025, vol. 13, issue 2, 1-15

Abstract: Welfare quality is usually a stochastic outcome, as attempts at improving social welfare cannot be predicted in advance. The advances in stock market participation conclude that equity market performance is able to reflect investors’ mass reactions and therefore can fairly reflect the empiricism of welfare quality. In this paper, the pillars of the Happy Planet Index ( hereinafter HPI) are used as proxies for countries’ welfare quality. The data cover 57 countries where equity markets exist over the annual period of 2006–2020. The results indicate that (a) the three pillars of HPIs have historical positive impacts on market capitalization and stock turnover; (b) stochastically, life satisfaction has an expected positive impact on market capitalization and stock turnover; (c) firms located in high (low) HPIs, life satisfaction, and life expectancy have significant (insignificant) stochastic impacts on market capitalization; and (d) the historical ecological footprints have positive impacts on market capitalization and stock turnover, whereas stochastic impacts are statistically insignificant.

Keywords: welfare quality; stochastic; happy plant index; equity market performance; world economies (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
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