Do Investors Care About Corporate Externalities? Experimental Evidence

Jean-Francois Bonnefon, Augustin Landier (), Parinitha Sastry and David Thesmar
Additional contact information
Jean-Francois Bonnefon: University of Toulouse 1 - Toulouse School of Economics Institute for Advanced Studies
Augustin Landier: HEC Paris
Parinitha Sastry: Federal Reserve Banks - Federal Reserve Bank of New York
David Thesmar: Massachusetts Institute of Technology (MIT) - Sloan School of Management

No 1350, HEC Research Papers Series from HEC Paris

Abstract: We characterize investors’ moral preferences in a parsimonious experimental setting, where we auction stocks with various ethical features. We find strong evidence that investors seek to align their investments with their social values (“value alignment”), and find no evidence of behavior driven by the social impact of investment decisions (“impact-seeking preferences”). First, the willingness to pay for a stock is a linear function of corporate externalities, and is symmetric for positive or negative externalities. Second, whether charity transfers are contingent or independent on investors buying the auctioned stock does not affect their WTP. Our results are thus compatible with a utility model where non-pecuniary benefits of firms’ externalities only accrue through stock ownership, not through the actual impact of investment decisions. Finally, non-pecuniary preferences are linear and additive: willingness to pay for social externalities is proportional to the expected sum of charity transfers made by firms (even if some of these donations are negative).

Keywords: Socially Responsible Investing; Social Impact; Value Alignment; Deontology; Consequentialism (search for similar items in EconPapers)
JEL-codes: G02 G11 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2019-10-02
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3458447 Full text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1350

DOI: 10.2139/ssrn.3458447

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ().