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The impact of investor attention during COVID-19 on investment in clean energy versus fossil fuel firms

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  • Wan, Daoxia
  • Xue, Rui
  • Linnenluecke, Martina
  • Tian, Jinfang
  • Shan, Yuli

Abstract

The outbreak of the COVID-19 pandemic has had significant negative impacts on financial markets, including energy stock markets. However, recently proposed and implemented green recovery plans may mean that clean energy firms demonstrate better performance than fossil fuel firms after the pandemic. As more voices call for the update of clean energy, theory on investor attention suggests investors will pay more attention to the potential to invest in clean energy stocks. Using a sample period of eight weeks before and during the pandemic, we find that the negative impact of the outbreak on both clean energy and fossil fuel firms is more significant for fossil fuel firms. Our results further show that during the pandemic there have been improved returns for clean energy firms as a consequence of investor attention, but not for fossil fuel firms. Our findings provide empirical evidence for the advantages of green recovery schemes in influencing financial markets, especially for clean energy stocks. These results suggest there are benefits for further promotion and implementation of green recovery stimulus measures post-pandemic.

Suggested Citation

  • Wan, Daoxia & Xue, Rui & Linnenluecke, Martina & Tian, Jinfang & Shan, Yuli, 2021. "The impact of investor attention during COVID-19 on investment in clean energy versus fossil fuel firms," Finance Research Letters, Elsevier, vol. 43(C).
    • Handle: RePEc:eee:finlet:v:43:y:2021:i:c:s1544612321000362
    DOI: 10.1016/j.frl.2021.101955
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    References listed on IDEAS

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    More about this item

    Keywords

    COVID-19; Clean energy; Fossil fuel; Investor attention; Green recovery;
    All these keywords.

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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