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Zoom URL: https://uni-frankfurt.zoom.us/j/68970615789?pwd=dmlsV3JRVWlWS1hVZHo5NmVIWm8yUT09
Meeting ID: 689 7061 5789
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. Unanswered in this debate is a central question: do investors themselves wish to maximize returns, or are they willing to sacrifice 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 three main results. First, on average, investors are willing to forgo some monetary gains in order to promote social interests. However, there is also a substantial proportion of investors (32% in our study) who have a strong preference for maximizing monetary gains, and are unwilling to sacrifice even extremely small amounts to advance any social goals. Second, individuals are willing to forgo greater amounts when consuming and making donations than when investing. This counsels caution in drawing inferences for investment preferences from consumption preferences. Third, there is significant heterogeneity in individuals’ willingness to sacrifice in each of the three channels, which is related to their political affiliation, gender and income. Our evidence suggests that Democrats, women and higher-income participants tended to sacrifice 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.