The Relationship Between COVID-19 and Investor Preference in Agricultural and Machine Industry

Abstract

AbstractThis paper explores how Covid-19 and the vaccine affect investor interest in the agricultural and machine industry. The difference-in-difference model and the Five-factor Fama-French model are adopted to process the French data library. Certain assumptions have to be made due to the nature of the model, such as autocorrelation and those five factors have to be significant. According to the complex nature of the effect of Covid-19, the result on the agricultural industry were abandoned due to unreliable and unrealistic results. Nevertheless, the result indicates that Coivd-19 has a limited effect on investor preference. Therefore, a different model should evaluate the effect on the agricultural industry. On the other hand, the result reveals that the machine industry was heavily affected by Covid-19, which shifted investor interest to aggressive firms and less operation revenue firms. The introduction of vaccines offset the shock on investment style but taking growing stock is preferred. Therefore, investors assume the machine industry will become riskier. The result suggests that Covid-19 and vaccine may not have the opposite effect. In another word, the effect of the vaccine may not offset the effect of Covid-19 due to their effect being different, and the investor does not take the vaccine as an event to settle Covid-19, or there is a problem in the assumption or model. It is still a long way to find out how those two events affect investors or the stock market. KeywordsAgricultural industryMachine industryCovid-19Difference-in-difference method