Experienced and Novice Investors: Does Environmental Information Influence on Investment Allocation Decisions?

Claus Holm () and Pall Rikhardsson ()
Additional contact information
Claus Holm: Department of Management Science and Logistics, Aarhus School of Business, Postal: The Aarhus School of Business, Fuglesangs Allé 4, 8210 Aarhus V, Denmark, http://www.asb.dk/staff/bs/hoc.aspx?page=%7B803EFF10-69F7-4C0F-AEE3-F7F410E4B6F2%7D
Pall Rikhardsson: Department of Management Science and Logistics, Aarhus School of Business, Postal: The Aarhus School of Business, Fuglesangs Allé 4, 8210 Aarhus V, Denmark, http://www.asb.dk/staff/bs/par.aspx?page=%7B803EFF10-69F7-4C0F-AEE3-F7F410E4B6F2%7D

No R-2006-02, Financial Reporting Research Group Working Papers from University of Aarhus, Aarhus School of Business, Department of Business Studies

Abstract: This paper examines the effect of environmental information on the investment

decisions of investors. The motivation for the experimental design

applied in this study is that unless actual decision making is observed,

the potential usefulness of environmental information (or lack

thereof) cannot be taken for granted. The study is based on an experiment

where groups of investors (varied by experience) were asked to

make investment allocation decisions based on financial information and

on supplementary environmental information (varied between cases). As

an investment allocation decision (varied by investment horizons) the

groups were asked to allocate funds to two companies based on the available

information. The findings suggest that environmental information has

the potential to influence investment allocation decisions. The findings

also suggest that the influence of environmental information on investment

allocation decisions is mitigated by the variables considered explicitly

in this study, i.e., the investment horizon (varied as short and long)

and investor experience (varied as novice and experienced investor). It is

concluded that because allocation decisions are multifaceted problems,

mixed results related to the influence of environmental information should

be expected

Keywords: Environmental reporting; Environmental disclosures; Allocation; Decision making; Investment horizon; Investors; Experiment (search for similar items in EconPapers)
Pages: 66 pages
Date: 2006-06-14
New Economics Papers: this item is included in nep-cbe, nep-env and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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