Exit vs. Voice

Eleonora Broccardo, Oliver Hart and Luigi Zingales

No 27710, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the relative effectiveness of exit (divestment and boycott) and voice (engagement) strategies in promoting socially desirable outcomes in companies. We show that in a competitive world exit is less effective than voice in pushing firms to act in a socially responsible manner. Furthermore, we demonstrate that individual incentives to join an exit strategy are not necessarily aligned with social incentives, whereas they are when well-diversified investors are allowed to express their voice. We discuss what social and legal considerations might sometimes make exit preferable to voice.

JEL-codes: D02 D21 D23 D62 D64 H41 L21 (search for similar items in EconPapers)
Date: 2020-08
Note: CF LE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.nber.org/papers/w27710.pdf (application/pdf)

Related works:
Working Paper: Exit vs. Voice (2020)
Working Paper: Exit vs. Voice (2020)
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:nbr:nberwo:27710

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w27710

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().