The price of environmental, social and governance practice disclosure: An experiment with professional private equity investors

Patricia Crifo, Vanina Forget and Sabrina Teyssier ()
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Vanina Forget: X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris
Sabrina Teyssier: ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique, X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris

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Abstract: This paper sheds light on the impact that environmental, social and governance (ESG) corporate practice disclosure has on equity financing. We present a unique framed field experiment in which professional private equity investors competed in closed auctions to acquire fictive firms. We hence observe that corporate non-financial (ESG) performance disclosure impacts firm valuation and investment decision and we quantify to which extent. Main result is an asymmetric effect, investors reacting more to bad ESG practice disclosure than to good ESG ones. Our findings are discussed in terms of practical implications for both investors and firm managers.

Keywords: Corporate finance; Corporate social responsibility; Field experiment; Firm valuation; Private equity (search for similar items in EconPapers)
Date: 2015-02
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Citations: View citations in EconPapers (43)

Published in Journal of Corporate Finance, 2015, 30, pp.168 - 194. ⟨10.1016/j.jcorpfin.2014.12.006⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01798441

DOI: 10.1016/j.jcorpfin.2014.12.006

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