Affiliation:
1. School of Management, Universidad de Los Andes, Bogotá 111711, Colombia
Abstract
We explore the importance of climate change as a news topic and examine the relationship between climate change news and financial returns using a large news database that consists of more than 4 million news stories. We use multinomial inverse regression—a Bayesian approach capable of handling the multi-dimensionality of our data—to translate news into a quantifiable input. We also build a climate change dictionary from different sources to identify climate change related words. We find that climate change is a persistent topic in our news universe, which indicates that it is a relevant news topic. This relevance is supported by the non-zero contribution of climate change related trigrams (CCRTs) in the constructed news index. However, our sample does not show an increasing trend of the relative daily presence of CCRTs, which signals that the news are unlikely the source that furthers the perceived increasing awareness of climate change. Lastly, we determine the salient CCRTs present during good and bad days of the market. This result highlights the presence in the news of topics related to fuel and energy, emission, climate change, disaster, and fiscal policy.
Funder
Credito Condonable de Doctorado of the Vicerector for Research of the University of los Andes and from Beca de Doctorado del Fondo Educativo Gabriel Vega Lara
Subject
Management, Monitoring, Policy and Law,Renewable Energy, Sustainability and the Environment,Geography, Planning and Development,Building and Construction
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