Investor Attention to Fossil Fuel Divestment Movement and Stock Returns

Abstract

This study investigates whether the investor attention to the fossil fuel divestment (III.)) movement is related to the stock returns on firms involved in extracting fossil fuels. Three complementary indicators of investor attention to the FFD movement are considered: (1) the U.S. weekly Google Search Volume Index on the topic “fossil fuel divestment,” (2) the U.S. weekly media coverage of fossil fuel divestment, and (3) the number of weekly visits to the “fossil fuel divestment” page on Wikipedia. Based on a sample of weekly returns on 1,850 U.S. firms over the period 2012-2020, our econometric estimations report a positive relationship between investor attention to FFD and excess stock returns for U.S. fossil fuel-related firms. Therefore, contrary to what the FFD campaigners might expect, the stigmatization of the fossil fuel industry does not drive down the stock returns on fossil fuel-related firms.