Managers’ green investment disclosures and investors’ reaction

Patrick R. Martin and Donald V. Moser

Journal of Accounting and Economics, 2016, vol. 61, issue 1, 239-254

Abstract: Although managers’ green investments have no impact on future cash flows in our experimental markets, investors respond favorably when managers make and disclose an investment and highlight the societal benefits rather than the cost to the company. Managers anticipate investors’ reaction and therefore often disclose their investment and the associated societal benefits. Managers and other shareholders benefit from investors’ reaction, but the investment cost always exceeds this benefit, demonstrating that managers make green investments because they value the societal benefits. Collectively, our findings show that both investors and managers tradeoff wealth for societal benefits and help explain managers’ corporate social responsibilty disclosures.

Keywords: Corporate social responsibility; CSR investment; CSR disclosure; Green investment; Socially responsible investing; Environmental disclosure (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (92)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:61:y:2016:i:1:p:239-254

DOI: 10.1016/j.jacceco.2015.08.004

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