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Swedish Sustainability Trend: Empirical analysis on the volatility effect of sustainable news on Swedish oil companies using GARCH 1.1
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
2017 (English)Independent thesis Advanced level (degree of Master (Two Years)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Purpose

The main purpose of this thesis was to evaluate the investment attractiveness of oil and gas stocks (registered on Nasdaq Stockholm) in face of the increasing campaigns for the adoption of clean energy. The findings can help in the formulation of relevant policy implications on the campaign for a cleaner environment

Design/Methodology/Approach

The authors assume positivism and objectivity as the philosophical aspects for the purpose of this study. Following these initial considerations, the nature of the study was adopted as quantitative. This follows a longitudinal design and a deductive approach, basing the paper on previous literature in the areas of environmental sustainability, market efficiency, financial news items and their effect on stock volatility in order to test own hypothesis.   

Theory

Following the methodological assumptions and the adoption of a deductive approach, relevant theory was selected to address the focus of previous research on which the research gaps and purpose are based. It also plays a role in introducing the reader to the relevant theories which will aid comprehension of further sections of this paper. Theories surrounding market efficiency, risk and return, the oil and gas industry and sustainability have all been mentioned. 

Findings

In order to fulfil the purpose of the study, the authors studied whether the volatility of oil and gas stocks are affected by clean energy related news. The empirical results suggest that the volatility of oil and gas stocks decline whenever news of clean energy is introduced, implying clean energy news cause lower volatility. To this end, oil and gas stocks are better off whenever clean energy/sustainability news are introduced into the market. 

Analysis

The empirical results seem to point to the fact that oil and gas firms may be benefiting from the investment they have made within the last two decades towards the issue of doing business in a more sustainable and socially responsible manner. It is therefore possible that investors get to reward them whenever news relating to sustainability and clean energy are announced.

Conclusions 

This thesis confirms the attractiveness of oil and gas stocks notwithstanding the increasing campaigns and initiatives aimed at promoting the adoption of clean energy. 

Research limitations

The research was limited in terms of setting since it only covered Sweden and therefore cannot answer questions regarding the overall attractiveness of oil and gas stocks across the globe.

Place, publisher, year, edition, pages
2017. , p. 54
Keyword [en]
Clean energy, Efficient Market Hypothesis, Volatility, Risk and Return, Fossil Free, Oil and Gas, Sustainability, Climate Change, Sweden
National Category
Business Administration
Identifiers
URN: urn:nbn:se:umu:diva-142083OAI: oai:DiVA.org:umu-142083DiVA, id: diva2:1158456
Educational program
Master's Programme in Finance
Supervisors
Examiners
Available from: 2017-11-20 Created: 2017-11-20 Last updated: 2017-11-20Bibliographically approved

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CiteExportLink to record
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