Demystifying the time varying linkage among ESG compliant, fintech and artificial intelligence stocks

Abstract

Purpose This paper aims to analyze the time-varying dynamic connectedness among environmental, social and governance (ESG)-compliant firms, Fintech-based firms and artificial intelligence (AI) firm’s stocks. Design/methodology/approach To examine the spillover from globally leading companies that systematically follow ESG reporting and standards into their financial books to top AI-based and Fintech-based companies, we use the daily observation extending from December 31, 2019 to October 9, 2023. For the empirical investigation, Diebold and Yilmaz (2012) model and Baruník and Křehlík (2018) model are employed. Findings An intriguing observation is found for both recipient and transmission as Northrop Grumman remains the least shock transmitter and receiver among all constituent markets irrespective of two different used models. On this note, Northrop Grumman can be classified among the safest stock comparatively which has to be held in short, medium and long run to mitigate the risk. Originality/value After extensive existing literature review and to the best of the authors knowledge, it is a novel study that examines the dynamic connectedness among ESG, Fintech and AI stocks covering two unprecedented events like the COVID-19 outbreak and the Russia–Ukraine invasion.