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How Much Do Investors Care About Social Responsibility?

2022; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.4115854

1556-5068

Scott Hirst, Kobi Kastiel, Tamar Kricheli‐Katz,

Community Development and Social Impact

Download This Paper Open PDF in Browser Add Paper to My Library Share: Permalink Using these links will ensure access to this page indefinitely Copy URL How Much Do Investors Care About Social Responsibility? 69 Pages Posted: 2 Jun 2022 Last revised: 21 Oct 2022 See all articles by Scott HirstScott HirstBoston University - School of Law; Harvard Law School Program on Corporate GovernanceKobi KastielTel Aviv University - Buchmann Faculty of Law; Harvard Law School, Program on Corporate GovernanceTamar Kricheli-KatzTel Aviv University Date Written: August 9, 2021 Abstract Perhaps the most important corporate law debate over the last several years concerns whether directors and executives should manage the corporation to maximize value for investors, or also take into account the interests of other stakeholders, or society. But, do investors themselves wish to maximize returns, or are they willing to forgo returns for social purposes? And more broadly, do market participants, such as investors and consumers, differ from donors in the ways in which they prioritize monetary gains and the promotion of social goals?This project attempts to answer these questions with evidence from an experiment conducted on 279 participants that involved real monetary gains for participants. Our empirical analysis provides the following four main results. First, on average, investors are willing to forgo some monetary gains in order to promote social interests. Second, individuals are willing to forgo greater amounts when consuming and making donations than when investing. Third, whereas most investors are willing to forgo gains to promote social interests, a significant percentage of investors (32% in our study) have a strong preference for maximizing monetary gains, and are unwilling to forgo even very small amounts to advance any social goals. Fourth, there is significant heterogeneity in individuals' willingness to forgo in each of the three channels (investment, consumption and donation), which is related to their political affiliation, gender and income. Our evidence suggests that Democrats, women and higher-income participants tended to forgo more and greater amounts compared to conservatives, men and lower-income participants, though these relationships vary with the cause in question. These findings have important implications for the current debate regarding corporate social responsibility, and for the actions of corporate executives and investment managers. Keywords: social responsibility, stakeholders, corporate purpose, socially responsible investing JEL Classification: K22, G23, G34, G41, M14 Suggested Citation: Suggested Citation Hirst, Scott and Kastiel, Kobi and Kricheli-Katz, Tamar, How Much Do Investors Care About Social Responsibility? (August 9, 2021). Available at SSRN: https://ssrn.com/abstract=4115854 Scott Hirst (Contact Author) Boston University - School of Law ( email ) 765 Commonwealth AvenueBoston, MA 02215United States Harvard Law School Program on Corporate Governance ( email ) 1575 MassachusettsHauser 406Cambridge, MA 02138United States Kobi Kastiel Tel Aviv University - Buchmann Faculty of Law ( email ) Ramat AvivTel Aviv, 69978Israel HOME PAGE: http://https://en-law.tau.ac.il/profile/kastiel Harvard Law School, Program on Corporate Governance ( email ) 1575 MassachusettsCambridge, MA 02138United States Tamar Kricheli-Katz Tel Aviv University ( email ) Ramat AvivTel-Aviv, 6997801Israel Download This Paper Open PDF in Browser Do you have a job opening that you would like to promote on SSRN? 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