An Analysis on the NASDAQ’s Potential for Sustainable Investment Practices during the Financial Shock from COVID-19

Abstract

There is a growing demand for sustainable business practices and for sustainable and impact investment as has been signaled by the Sustainable Development Goals ratified by all the United Nations members. However, there is not that much evidence on how sustainable investments perform during crises compared to regular investments. This paper investigates if sustainable investments within the NASDAQ have a lower volatility rate when reacting to a significant global crisis such as the COVID-19 pandemic. It groups the shares of businesses with Corporate Social Responsibility (CSR) practices that are ranked 70% or higher given by CSRHub, Inc. and compares it to business shares with the lowest-ranked CSR business practices at 30% or lower. The top 30% and bottom 30% CSR stocks’ volatility will be predicted using variations of the GARCH model. The top 30% CSR stocks of the NASDAQ had a lower rate of volatility for a global crisis than the bottom 30% CSR stocks. Technology is the only sector whose top 30% showed higher volatility. However, the top 30% of companies in the Health Care and Utilities sectors show a higher increase in returns and a lower drop in returns. These results signal the higher uncertainty associated with some cutting-edge products and services offered by the top 30% of technology companies and the preference for more established companies that offer higher quality services when it comes to satisfying basic needs such as health and utilities in difficult times.

Self-regulation of sustainability as a manifestation of corporate social responsibility

“…In this context, the notion of sustainable development represented an extremely revealing vision of the interest and willingness of nations and their governments to adopt viable modes of production and consumption and invent and promote development compatible with nature as a vehicle for favouring present and future social equity (Shields, Ajour & Vila, 2021). Thus, sustainable development refers to development that produces a reasonable and stable profitability over time, respects the cultural and ethical values of the communities involved and maintains the fundamental characteristics of the natural system over time in terms of its components and interactions (Miranda et al, 2007;Ajour, Consolación-Segura & Huertas-García, 2020).…”

A Hybrid Data Analytics Framework with Sentiment Convergence and Multi-Feature Fusion for Stock Trend Prediction

“…As technology has advanced, media news has become an important signal that captures the nonlinear factors that influence stock price performance, thereby improving the accuracy of stock price forecasting. Recent studies have suggested that media news and related sentiments can influence corporate and investor behavior as well as stock market performance [8]. Similarly, stock market trends are influenced by various events such as political influences, information security events [9,10], specific news or announcements [2], and national politics [11].…”

Investors’ Delight? Climate Risk in Stock Valuation during COVID-19 and Beyond

“…For the COVID-19 period, markets valued firms lower when they were more exposed to international trade, higher corporate debt, and lower cash holdings [24]. Shields, El Zein, and Brunet [25] show that sustainable stocks have lower volatility than less sustainable stocks during the COVID-19 period using a GARCH framework. In addition, socially responsible and sustainable stocks measured by environmental, social, and governance criteria (ESG) have turned out to provide more resilience during the GFC [26] and the COVID-19 shock [27,28].…”