The Impact of Uncertain Welfare Quality on Equity Market Performance

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Management Department

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Management Department

Third Author's Department

Management Department

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https://doi.org/10.3390/ijfs13020067

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Tarek Eldomiaty Islam Azzam Hoda El Kolaly Nermeen Youssef Marwa Anwar Sedik Rehab ElShahawy

Document Type

Research Article

Publication Title

International Journal of Financial Studies

Publication Date

6-1-2025

doi

10.3390/ijfs13020067

Abstract

Welfare quality is usually a stochastic outcome, as attempts at improving social welfare cannot be predicted in advance. The advances in stock market participation conclude that equity market performance is able to reflect investors’ mass reactions and therefore can fairly reflect the empiricism of welfare quality. In this paper, the pillars of the Happy Planet Index (hereinafter HPI) are used as proxies for countries’ welfare quality. The data cover 57 countries where equity markets exist over the annual period of 2006–2020. The results indicate that (a) the three pillars of HPIs have historical positive impacts on market capitalization and stock turnover; (b) stochastically, life satisfaction has an expected positive impact on market capitalization and stock turnover; (c) firms located in high (low) HPIs, life satisfaction, and life expectancy have significant (insignificant) stochastic impacts on market capitalization; and (d) the historical ecological footprints have positive impacts on market capitalization and stock turnover, whereas stochastic impacts are statistically insignificant.

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