IDEAS home Printed from https://ideas.repec.org/a/taf/euract/v17y2008i3p537-557.html
   My bibliography  Save this article

Experienced and Novice Investors: Does Environmental Information Influence Investment Allocation Decisions?

Author

Listed:
  • Claus Holm
  • Pall Rikhardsson

Abstract

This paper examines the effect of environmental information on investment decisions. The results are based on an experiment in which groups of investors (varied by experience) were asked to make short- and long-term investment allocation decisions based on financial information and on supplementary environmental information (varied between cases). The results suggest that environmental information disclosure influences investment allocation decisions. The results also suggest that potentially mitigating factors such as the investment horizon and the experience level of investors affect investment allocation decisions, but the predicted main effect of positive environmental information holds across different investment horizons and investor types. Hence, the results are not attributable to interaction effects. Interestingly, compared to other company information, environmental information is not rated as being very important by participating subjects even though the results suggest that it influences investment decisions.

Suggested Citation

  • Claus Holm & Pall Rikhardsson, 2008. "Experienced and Novice Investors: Does Environmental Information Influence Investment Allocation Decisions?," European Accounting Review, Taylor & Francis Journals, vol. 17(3), pages 537-557.
  • Handle: RePEc:taf:euract:v:17:y:2008:i:3:p:537-557 DOI: 10.1080/09638180802016627
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/09638180802016627
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:bla:joares:v:34:y:1996:i:1:p:45-65 is not listed on IDEAS
    2. Holmstrom, Bengt & Tirole, Jean, 2000. "Liquidity and Risk Management," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(3), pages 295-319, August.
    3. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    4. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    5. Laeven, Luc & Majnoni, Giovanni, 2003. "Loan loss provisioning and economic slowdowns: too much, too late?," Journal of Financial Intermediation, Elsevier, vol. 12(2), pages 178-197, April.
    6. Michael Manove & A. Jorge Padilla, 1999. "Banking (Conservatively) with Optimists," RAND Journal of Economics, The RAND Corporation, pages 324-350.
    7. Wetmore, Jill L. & Brick, John R., 1994. "Loan-loss provisions of commercial banks and adequate disclosure: A note," Journal of Economics and Business, Elsevier, pages 299-305.
    8. Berger, Allen N. & Herring, Richard J. & Szego, Giorgio P., 1995. "The role of capital in financial institutions," Journal of Banking & Finance, Elsevier, vol. 19(3-4), pages 393-430, June.
    9. Fudenberg, Drew & Tirole, Jean, 1995. "A Theory of Income and Dividend Smoothing Based on Incumbency Rents," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 75-93, February.
    10. Joseph P. Hughes & William W. Lang & Loretta J. Mester & Choon-Geol Moon, 1996. "Efficient banking under interstate branching," Proceedings, Board of Governors of the Federal Reserve System (U.S.), pages 1045-1075.
    11. Raghuram G. Rajan, 1994. "Why Bank Credit Policies Fluctuate: A Theory and Some Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 399-441.
    12. Kim, Daesik & Santomero, Anthony M., 1993. "Forecasting required loan loss reserves," Journal of Economics and Business, Elsevier, pages 315-329.
    13. Benston, George J. & Wall, Larry D., 2005. "How should banks account for loan losses," Journal of Accounting and Public Policy, Elsevier, pages 81-100.
    14. Larry D. Wall & Timothy W. Koch, 2000. "Bank loan-loss accounting: a review of theoretical and empirical evidence," Economic Review, Federal Reserve Bank of Atlanta, pages 1-20.
    15. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    16. Acharya, Sankarshan, 1996. "Charter value, minimum bank capital requirement and deposit insurance pricing in equilibrium," Journal of Banking & Finance, Elsevier, vol. 20(2), pages 351-375, March.
    17. Crockett, A, 1997. "The Theory and Practice of Financial Stability," Princeton Essays in International Economics 203, International Economics Section, Departement of Economics Princeton University,.
    18. George J. Benston & Larry D. Wall, 2005. "How should banks account for loan losses?," Economic Review, Federal Reserve Bank of Atlanta, pages 19-38.
    19. Shrieves, Ronald E. & Dahl, Drew, 2003. "Discretionary accounting and the behavior of Japanese banks under financial duress," Journal of Banking & Finance, Elsevier, vol. 27(7), pages 1219-1243, July.
    20. Winter Ralph A., 1994. "The Dynamics of Competitive Insurance Markets," Journal of Financial Intermediation, Elsevier, vol. 3(4), pages 379-415, September.
    21. Anand Mohan Goel, 2003. "Why Do Firms Smooth Earnings?," The Journal of Business, University of Chicago Press, vol. 76(1), pages 151-192, January.
    22. Scholes, Myron S & Wilson, G Peter & Wolfson, Mark A, 1990. "Tax Planning, Regulatory Capital Planning, and Financial Reporting Strategy for Commercial Banks," Review of Financial Studies, Society for Financial Studies, vol. 3(4), pages 625-650.
    23. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    24. Moyer, Susan E., 1990. "Capital adequacy ratio regulations and accounting choices in commercial banks," Journal of Accounting and Economics, Elsevier, vol. 13(2), pages 123-154, July.
    25. repec:bla:joares:v:33:y:1995:i:2:p:353-367 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cédric Lesage & Yuan Ding & Thomas Jeanjean & Hervé Stolowy, 2009. "An experiment in the economic consequences of additional disclosure: The case of the Fair Value of Unlisted Equity Investments," Post-Print hal-00495573, HAL.
    2. Consolandi, Costanza & Innocenti, Alessandro & Vercelli, Alessandro, 2009. "CSR, rationality and the ethical preferences of investors in a laboratory experiment," Research in Economics, Elsevier, pages 242-252.
    3. Costanza Consolandi & Alessandro Innocenti & Alessandro Vercelli, 2009. "CSR, rationality and the ethical preferences of investors in a laboratory experiment," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 0609, Department of Economic Policy, Finance and Development (DEPFID), University of Siena.
    4. Ahn, Heinz & Vazquez Novoa, Nadia, 2016. "The decoy effect in relative performance evaluation and the debiasing role of DEA," European Journal of Operational Research, Elsevier, vol. 249(3), pages 959-967.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:euract:v:17:y:2008:i:3:p:537-557. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/REAR20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.