A0370
Title: Investor sentiment and green shipping: Combining proxy variables and a large language model
Authors: Yao Shi - City University of London (United Kingdom)
Nikos Papapostolou - City University of London (United Kingdom)
Panos Pouliasis - City University of London (United Kingdom)
Ioannis Moutzouris - City, University of London (United Kingdom) [presenting]
Abstract: Existing research suggests that investor sentiment affects asset prices, returns, and future investment. Nonetheless, little is known about its influence on investment in green assets. The example of a real-asset, capital-intensive industry (shipping) is taken to study the effect of sentiment on green investment. The sentiment indices are built with large language models, bidirectional encoder representations from transformers (BERT) and financial BERT (FinBERT), as well as key shipping finance variables. The focus is on the period 2020-2025, where the regulations for the reduction of greenhouse gas emissions for shipping become increasingly strict. The results indicate that positive news on the industry's net-zero transition significantly negatively influences future investment in greener vessels. This contrasts with the documented evidence that positive sentiment drives investment in conventional (i.e., non-green) assets. Findings suggest that an overly optimistic outlook on the net-zero progress may hinder green initiatives, likely because investors perceive less urgency to act. Findings yield important implications for the industry and policymakers alike.
