This thesis examines how investor sentiment, firm complexity, and climate-related communication interact to shape financial market behavior, firm performance, and corporate environmental outcomes. The research utilises a large-scale dataset of over 180,000 U.S. ECC transcripts from 2002 to 2023. By integrating textual analysis, firm-level financials, market data, and environmental performance metrics, this thesis offers three empirical investigations that together highlight the behavioral and operational mechanisms linking firm communication with key economic and non-economic outcomes.

The second chapter explores the behavioral interplay between investor sentiment and alphabetic bias in shaping stock-level trading activity. Building on salience theory and attention-based heuristics, it shows that investor sentiment amplifies the trading advantage of firms listed earlier alphabetically, especially under conditions of uncertainty and information asymmetry. This chapter contributes to behavioral asset pricing by illustrating how superficial ordering effects interact with emotional cues to influence investor attention and trading decisions.

The third chapter investigates how overall firm complexity, capturing the omnibus nature of structural, operational, and strategic aspects of the firm affects financial performance and how this relationship is influenced by investor sentiment. Using firm-level sentiment scores derived from FinBERT and a textual measure of firm complexity based on ECC transcripts, the chapter finds that higher complexity is associated with lower firm performance outcomes. However, firms with higher positive sentiment in their communications experience a weaker negative impact, suggesting that sentiment may help market participants interpret or tolerate complexity more favorably.

The fourth chapter focuses on climate change discourse in ECCs and its influence on corporate emissions, using the U.S. Environmental Protection Agency’s (EPA) Toxics Release Inventory (TRI) database and climate exposure scores developed from textual bigrams. This chapter shows that firms with higher climate-related communication are more likely to reduce their toxic emissions, particularly when reputational risk, measured by RepRisk is high. The findings highlight how environmental communication, and external reputational pressures jointly motivate firms to align public discourse with environmental action.

Together, these chapters provide new insights into how firm communication, sentiment, and structural characteristics influence market outcomes and corporate behavior. The thesis contributes to research in behavioral finance, corporate complexity, and environmental ii disclosure, offering implications for investors, regulators, and sustainability-focused stakeholders.