Jessica Tang

Date of Award

Spring 2024

Degree Name

Bachelor of Science (BS)

Advisor(s)

Jie Ren

Abstract

The lack of progress in meeting the goals outlined by the Paris Agreement begs the question of the legislation's true effectiveness and, particularly, if businesses and investors care since they are large contributors toward high carbon emissions. Using Twitter sentiment as a proxy for the degree of care, the relationship between sentiment and the stock performance of Exxon Mobil (representing carbon-intensive companies) versus Johnson and Johnson (representing non-carbon-intensive companies) was analyzed for Paris Agreement-related events. Sentiment and stock price data were collected from the Bloomberg terminal for 5 trading days before and after the signing of the Paris Agreement and when Donald Trump withdrew the United States from the Paris Agreement. A correlational analysis and difference-in-difference analysis were performed to identify a general relationship between sentiment and stock price and how that relationship varies depending on the industry and whether an event is expected or not. The relationship between sentiment and stock price data was weak overall due to low correlations and coefficient of determinations, pointing to how sentiment is not a suitable predictor of market performance. The relationship was stronger for carbon-intensive companies and unexpected events, but it is uncertain if this can be generalized since the stronger relationship for carbon-intensive companies was only present for the unexpected event, and there were significant limitations to the difference-in-difference analysis that pointed to the stronger relationship for unexpected events. Overall, there is insufficient evidence to take a strong position on whether or not businesses and investors care about the Paris Agreement.

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