LFIN Seminar - Sébastien Pouget

Sébastien Pouget

(Toulouse University)

invited by Catherine D'Hondt

will give a presentation on :

Investor Valuation for Socially Responsible Assets: A Willingness to Pay Experiment

Abstract : 

We present an experimental study of investors’ willingness to pay for socially responsible assets. We design an initial public offering experiment in which various assets may be issued with an identical financial risk-return profile but with different intensity and timing of societal benefits. The societal benefits are represented in the experiment by a donation to a charity that materializes only if the asset is issued. In the experiment, subjects attribute a positive value to societal benefits for large but not for low levels of expected donation. Moreover, when the societal benefit occurs along with bad financial performance, assets suffer from a price discount compared to cases in which it occurs with good performance. This implies that utility functions appear to be non-separable in wealth and societal benefit. We offer implications for the design of corporate social responsibility policies and for the pricing of responsible assets.

 Sébastien Pouget