THE IMPACT OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE FACTORS ON INVESTORS’ BEHAVIOR - AN EXPERIMENTAL STUDY IN THE REALM OF SUSTAINABLE INVESTMENT
THE IMPACT OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE FACTORS ON INVESTORS’ BEHAVIOR - AN EXPERIMENTAL STUDY IN THE REALM OF SUSTAINABLE INVESTMENT

Summary/Abstract: Sustainability has become in recent years one of the major challenges for society as a whole and for the business world. This study examines the relationship between environmental, social, and governance (ESG) factors, corporate financial performance (CFP), and investing behavior. Using a sequential 2 × 2 between-subjects experiment, the goal is to investigate how various investors incorporate into their judgement and decision-making process, the financial and sustainability information presented to them in four different combinations. Results indicate that integrating sustainability and responsible business behavior into an organization’s corporate strategy does not significantly influence investors’ stock price assessment or allocation of funds. This conclusion holds irrespective of how the company’s financial evolution looks like (improving/declining revenues and earnings). Age and other various demographics do not affect the results, while investors’ view on the relevance and the reliability of the ESG material provided to them has a mediating effect on their long-term investment approach.

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