Corporate Actions as Moral Issues
In recent years, a growing body of research in finance and economics has explored how nonpecuniary preferences—moral, ethical, or social concerns that are not directly tied to financial returns—shape the decisions of investors, consumers, and managers. Much of this work has focused on environmental, social, and governance (ESG) considerations and has reinvigorated the broader […]
Zwetelina Iliewa is an Assistant Professor of Finance at the Department of Economics at the University of Bonn, Elisabeth Kempf is an Associate Professor of Business Administration at Harvard Business School, and Oliver G. Spalt is a Professor of Finance at University of Mannheim. This post is based on their recent paper.
In recent years, a growing body of research in finance and economics has explored how nonpecuniary preferences—moral, ethical, or social concerns that are not directly tied to financial returns—shape the decisions of investors, consumers, and managers. Much of this work has focused on environmental, social, and governance (ESG) considerations and has reinvigorated the broader debate over the objective function of the firm.
In our new paper, Corporate Actions as Moral Issues, we contribute to this discussion by asking: which corporate actions do people care most about from a moral perspective, and why? Using a representative sample of more than 2,000 Americans, we examine how respondents evaluate a broad set of corporate actions, ranging from CEO pay to fossil fuel usage, while holding constant the financial value created by these decisions.
Our findings provide robust evidence that many corporate actions are viewed through a moral lens, and that these moral views are strongly shaped by individual differences in moral universalism—the tendency to extend concern equally to others, regardless of social or geographic distance. (more…)
