Circular Economy Financial Performance: Sustainability (ESGUI), and Tourism Uncertainty (TUI)

Although circular economy investments are seen as an important tool for achieving the SDGs, studies that examine the different sources of uncertainty affecting these investments within a nonlinear framework remain limited. The current literature largely focuses only on traditional uncertainty indices such as EPU, GPR, and pandemic‐related uncertainty. This study fills this gap in literature by including, for the first time in the circular economy literature, two newly developed uncertainty indices, the ESG‐related sustainability uncertainty indices (ESGUI) and the Tourism Uncertainty Index (TUI), alongside traditional uncertainty indicators, and examining their associations with circular economy financial performance. In this study, wavelet power spectrum (WPS), wavelet quantile regression (WQR), wavelet quantile‐on‐quantile regression (WQQR), and Baruník–Křehlík frequency‐domain connectedness (BKFSC) methods were used. The findings show that the relationships between uncertainty and circular economy financial performance differ across investment horizons and market regimes. WQQR results show that the relationships between ESGUI and TUI and circular economy financial performance are nonlinear and vary by market regime. Similarly, the relationships between EPU, GPR, PNDMC, the S&P 500, and circular economy financial performance also differ by market conditions. These findings highlight the importance of considering different sources of uncertainty and general market conditions together when evaluating circular economy financial performance.