A Mediating Effect of News Information on the Driver of Green Investment and Herding Behaviour in China's A-Share Market

Abstract

In recent years, the surge in interest and investment towards environmentally sustainable initiatives, particularly in emerging economies like China, has garnered significant attention. This paper investigates the intricate dynamics between green investment drivers, herd behaviour, and the mediating role of news information in China's A-share market. Drawing upon a comprehensive dataset spanning the recent years, this study employs advanced statistical techniques, including structural equation modelling, to analyse the relationships between the aforementioned variables. Firstly, it examines the primary drivers behind green investment in China, considering factors such as regulatory policies, corporate social responsibility initiatives, and market demand for sustainable products and services. Subsequently, the paper delves into the phenomenon of herd behaviour within the A-share market, exploring how investor decisions are influenced by the actions of others rather than fundamental market indicators. This aspect is particularly pertinent in the context of green investment, where social proof and conformity may play a significant role in shaping investment decisions. Moreover, the study elucidates the mediating effect of news information in this relationship. News media serves as a critical intermediary, disseminating information about regulatory changes, corporate sustainability initiatives, and market trends, which in turn influence investor sentiment and decision-making processes. By uncovering the mediating role of news information, this research provides valuable insights into the mechanisms driving green investment and herd behaviour in China's A-share market. Understanding these dynamics is crucial for policymakers, market participants, and sustainability advocates alike, as they seek to promote environmentally responsible investment practices and mitigate the adverse effects of herd behaviour on market stability and efficiency. Overall, this paper contributes to the growing body of literature on sustainable finance and behavioural economics by shedding light on the complex interplay between green investment drivers, herd behaviour, and the role of news information in shaping investor decisions in China's rapidly evolving financial landscape.