Trends from the Corporate Sentiment Tracker: COVID-19 and Pandemic Recovery

| Edna Twumwaa Frimpong

The story of corporate sentiment over the last 18 months in the words of corporate leaders

Commentary by Edna Frimpong and Andrew Duchon

The Diligent Institute launched a first-of-its-kind product known as the Corporate Sentiment Tracker (CST) in June 2021.  The Corporate Sentiment Tracker is based on data derived from Manzama’s Insights (A diligent brand) platform. The Corporate Sentiment Tracker was designed and programmed with artificial intelligence to look at a subset of Insights’ outputs, namely articles in the Management subfactor which express an opinion, and whether it is positive or negative.  In general, these are articles where the CEO, or other named corporate leader from the company, expresses an opinion about their company, industry, or economy in general.  Articles where the corporate leader is talking about a product, or other subfactor, will generally be classified into that respective subfactor.  The goal of the CST is to capture management’s opinions about the state of the world in general, currently and into the future.  The CST consumes news data from over 56,000 English-language sources.  The Tracker is using news concerning 7,500 public companies around the world, but due to the language restriction, Management opinions are more likely to show up from US, Canadian, UK, and Australian companies.   About 125,000 articles per day come through the system, but just a fraction of these are included in the tracker.

Coronavirus pandemic takes centre stage in the words of corporate leaders

The Corporate Sentiment Tracker can give us insight into what management is concerned or enthused about. The graph below shows the top term each month in the year 2020, based on the number of companies that had management bring up that term in the media during the month. According to the Tracker, over the course of the last year, corporate leaders spoke publicly about the pandemic more frequently than any other issue. This finding should not come as a surprise given that the pandemic has engulfed the world for more than 18 months.

The corporate world began to take notice of the virus in January 2020, and we see that it is expressed in the sentiments of corporate leaders as “pandemic” began to take the spot of top trending term from February to October 2020. Terms related to the COVID-19 pandemic were mentioned by 108 companies consecutively in March and April, dropping to 37 companies in May. However, the health score for this term was negative, which means that issuers and their corporate leaders were generally speaking about the pandemic in negative terms. The pandemic ground corporate entities (and the rest of the world) to their knees and forced them to re-think policies such as working from home, workplace safety, supply chain, and a host of other issues. There was and continues to be general uncertainty about the future, and so a negative health score is again not surprising.

Starting in July 2020, we see in the Tracker that the corporate leaders began to feel more bullish. We see this change in sentiment expressed by the Health Score trend in the graph below. In November 2020, “future” became the top term in the statements of Corporate Leaders captured by the CST. However, we find that the market was pessimistic on the topic as the Health Score indicates that the sentiments expressed with the term were negative.  In December, “pandemic” knocked out “future” and became the top term. This again is not surprising as the world faced a second wave of the COVID-19 pandemic; however, we do see an uptick in optimism in the sentiments expressed by corporate leaders which could be due to vaccines beginning to be released.

The graph below shows the top trending term for each month in the year 2021 so far. The findings suggest that corporate leaders have moved from expressing sentiments on the pandemic and are now focused on rebuilding, since “future” and “growth” have recently toppled “pandemic” as the top term.  We also see that the Health Score is positive, which indicates that companies are generally feeling more positive about the current business environment. In the Tracker, the findings suggest that the pandemic continued to be the most trending term from December 2020 to January 2021 and corporate leaders were feeling very negative on the topic.

But in the month of February, “growth” became the top term in the statements of executives of 55 companies in our database. The health score was also very positive meaning that issuers were feeling more confident in business conditions and outlook. It is also worth noting that from February to July 2021, corporate leaders have been using the terms “growth” and “future” the most frequently, and the terms’ corresponding health scores are positive. This indicates that corporate leaders are feeling increasingly positive about the future.

The top term in March, 2021 was “pandemic” yet again, which could be due to the fact that that was when most economies began opening up and the vaccine rollouts became intensified hence we also a general positive health score on the term during the month. Additionally, March 2021 marks the one-year anniversary of widespread lockdowns in the U.S. and Europe, which could be responsible for the term moving back into the top spot.

Areas for Future Investigation

  • Are the Tracker’s health scores for various terms predictive of future performance? For example, do positive health scores for the words “future” and “growth” indicate that financial performance will improve?
  • Do the Tracker’s top terms have anything to do with where corporate leaders focus their attention in the future? In other words, does the fact that certain company leaders spoke out on specific issues indicate that they are likely to announce changes in company policy on that issue in the near future?


About the Author

Edna Twumwaa Frimpong

Edna Twumwaa Frimpong

Head of International Research

Edna Frimpong is an experienced research analyst with a demonstrated history of working in the information technology and services industry. In her role with the Diligent Institute, Edna oversees and directs corporate governance research projects and partnerships internationally, outside the US. She joined Diligent Institute in 2021 after six years with CGLytics  -- a corporate governance analytics firm based in Amsterdam, The Netherlands, acquired by Diligent -- where she served as Head of Research for the EMEA region. Previously, Edna held research positions at firms including Sustainanalytics and Carnomise.  She received her Master's Degree in Finance and Law from the Duisenberg School of Finance in Amsterdam, and her Bachelor's Degree in Administration, Insurance and Risk Management from the University of Ghana.