The impact of climate change news on the US stock market

PurposeThis paper aims to investigate the impact of climate change news on the dynamics of US stock indices.Design/methodology/approachThe empirical basis of the study was 3,209 news articles. Sentiment analysis was performed by a pre-trained bidirectional FinBERT neural network. Thematic modeling is based on the neural network, BERTopic.FindingsThe results show that news sentiment can influence the dynamics of stock indices. In addition, five main news topics (finance and politics natural disasters and consequences industrial sector and Innovations activism and culture coronavirus pandemic) were identified, which showed a significant impact on the financial market.Originality/valueFirst, we extend the theoretical concepts. This study applies signaling theory and overreaction theory to the US stock market in the context of climate change. Second, in addition to the news sentiment, the impact of major news topics on US stock market returns is examined. Third, we examine the impact of sentimental and thematic news variables on US stock market indicators of economic sectors. Previous works reveal the impact of climate change news on specific sectors of the economy. This paper includes stock indices of the economic sectors most related to the topic of climate change. Fourth, the research methodology consists of modern algorithms. An advanced textual analysis method for sentiment classification is applied: a pre-trained bidirectional FinBERT neural network. Modern thematic modeling is carried out using a model based on the neural network, BERTopic. The most extensive topics are “finance and politics of climate change” and “natural disasters and consequences.”

• Publication year

  2024

• Venue

  The Journal of Risk Finance

• Publication date

  2024-02-13

• Fields of study

  Not labeled

• Identifiers
  DOI 10.1108/jrf-06-2023-0133
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

• Investor climate sentiment and financial markets

  2023cited by this paper
• BERTopic: Neural topic modeling with a class-based TF-IDF procedure

  2022cited by this paper
• Hurricanes as news? Assessing the impact of hurricanes on the stock market returns of energy companies

  2021cited by this paper
• Strength of words: Donald Trump's tweets, sanctions and Russia's ruble

  2021cited by this paper
• Green bond market and Sentiment: Is there a switching Behaviour?

  2021cited by this paper
• Climate change events and stock market returns

  2021cited by this paper
• Climate Change News Risk and Corporate Bond Returns

  2020cited by this paper
• Climate Change Concerns and the Performance of Green Versus Brown Stocks

  2020cited by this paper
• Topic modelling the news media representation of climate change

  2020cited by this paper
• Oil price shocks and the equity market: Evidence for the S&P 500 sectoral indices

  2019cited by this paper
• Every Little Helps? ESG News and Stock Market Reaction

  2019cited by this paper
• Variable Selection

  2019cited by this paper
• Sustainable investing in equilibrium

  2019cited by this paper
• Sentence-BERT: Sentence Embeddings using Siamese BERT-Networks

  2019cited by this paper
• FinBERT: Financial Sentiment Analysis with Pre-trained Language Models

  2019cited by this paper
• Time-varying relation between black and green bond price benchmarks: Macroeconomic determinants for the first decade

  2019cited by this paper
• UMAP: Uniform Manifold Approximation and Projection for Dimension Reduction

  2018cited by this paper
• Mass media effects on trading activities: television broadcasting evidence from Japan

  2018cited by this paper
• How does news impact on the stock prices of green firms in emerging markets?

  2017cited by this paper
• Attention is All you Need

  2017cited by this paper
• hdbscan: Hierarchical density based clustering

  2017cited by this paper
• Geographic variation in opinions on climate change at state and local scales in the USA

  2015cited by this paper
• Exploring the Space of Topic Coherence Measures

  2015cited by this paper
• The Development and Psychometric Properties of LIWC2015

  2015cited by this paper
• Signaling through corporate accountability reporting

  2015cited by this paper
• The reaction of stock returns to unexpected increases in the federal funds rate target

  2011cited by this paper
• Media, Politics and Climate Change: Towards a New Research Agenda

  2009cited by this paper
• Latent Dirichlet Allocation

  2009cited by this paper
• Regime‐switching in stock index and Treasury futures returns and measures of stock market stress

  2009cited by this paper
• Climate change and journalistic norms: A case-study of US mass-media coverage

  2007cited by this paper
• Efficient Capital Markets: A Review of Theory and Empirical Work

  2007cited by this paper
• Investor Sentiment and the Cross-Section of Stock Returns

  2006cited by this paper
• Investor Sentiment and Asset Valuation

  2005cited by this paper
• Relationships Between Implied Volatility Indexes and Stock Index Returns

  2005cited by this paper
• Ridge Regression: Biased Estimation for Nonorthogonal Problems

  2000cited by this paper
• Investor Psychology and Security Market Under- and Overreactions

  1999cited by this paper
• A Probabilistic Analysis of the Rocchio Algorithm with TFIDF for Text Categorization

  1997cited by this paper
• A Model of Investor Sentiment

  1997cited by this paper
• Regression Shrinkage and Selection via the Lasso

  1996cited by this paper
• A Density-Based Algorithm for Discovering Clusters in Large Spatial Databases with Noise

  1996cited by this paper
• The Noise Trader Approach to Finance

  1990cited by this paper
• Dividend Policy under Asymmetric Information

  1985cited by this paper
• Does the Stock Market Overreact

  1985cited by this paper
• The disposition to sell winners too early and ride losers too long

  1985cited by this paper
• Journal of International Financial Markets, Institutions & Money a Long-run Relationship between Stock Price Index and Exchange Rate: a Structural Nonparametric Cointegrating Regression Approach

  year unknowncited by this paper

• Climate anomalies and stock market dynamics: Evidence from empirical analysis.

  2025cites this paper
• Examining climate risk attention in stock markets: insights from quantile-on-quantile regression

  2025cites this paper
• Benchmarking technical, financial analysis and economic efficiency in Maritime Canadian agriculture

  2025cites this paper
• Geopolitical risk, climate risk and financial innovation in the energy market

  2025cites this paper
• Does green stock immune to policy uncertainties? Examining impacts on Indian economy amid US monetary, climate, oil and energy uncertainties

  2025cites this paper
• ESG uncertainties and valuation implications: Evidence from the EU banking sector

  2025cites this paper
• CSR and Corporate Sustainability: Theoretical and Empirical Approaches Based on Data Science in Spanish Tourism Companies

  2025cites this paper
• Decoding IPO dynamics: the changing role of financial and non-financial metrics

  2025cites this paper
• Climate risk co-movements effect on South Asia’s emerging stock market for financial inclusion

  2025cites this paper
• Rising Temperatures, Rising Transparency: Revealing the Financial Benefits of Climate Change Disclosure

  2025cites this paper
• From Headlines to Stock Trends: Natural Language Processing and Explainable Artificial Intelligence Approach to Predicting Turkey’s Financial Pulse

  2025cites this paper
• Impact of Environmental Double Materiality on Firm Valuation: Evidence from the EU

  2025cites this paper
• Climate policy uncertainty and trading behavior: Evidence from aggregate herd behavior

  2025cites this paper
• Spotlighting energy sector through green transition attention

  2025cites this paper
• A Compilation of Relationships between Climate Change and Finance

  2024cites this paper
• The impact of ESG profile on Firm's valuation in emerging markets

  2024cites this paper