Does investor attention influence water companies' stock returns?

The potential impacts of climate change and population growth are having serious effects on the energy and agricultural industries, which might compromise water availability. Water scarcity requires the global water industry to examine the rapidly changing market and, together with public initiatives, make innovative investments to guarantee better water management models. Therefore, from an investor's perspective, it is important to understand what might influence water companies' stock returns. This paper analyzes how the energy and agriculture industries and the growing environmental awareness of investors influence water companies' stock returns. Panel data on the monthly stock returns of companies in the S&P Global Water Index from June 2008 to January 2019 are used. The environmental awareness of investors is measured in terms of their attention to Internet activity. The results show that agricultural price trends positively influence water companies' stock returns, while energy price trends negatively influence them. The results also show that investor attention has a negative relationship with water companies' stock returns. The severity of the situation surrounding water management seems to have significantly increased people's attention to water saving and environmental awareness, leading people to behave more responsibly.