IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/16074.html

Decision rules for corporate investment

Author

Listed:
  • De Adelhart Toorop, Reinier
  • Schoenmaker, Dirk
  • Schramade, Willem

Abstract

We investigate decision rules for corporate investment by designing a company value frontier. This company value frontier allows for balancing financial value and social and environmental impact. Different value concepts – ranging from shareholder value to shareholder welfare and integrated value – are analysed resulting in varying preferences for social and environmental impact or value. Next, these preferences are incorporated in investment decision rules. The traditional net present value (NPV) rule optimises only financial value. We propose new decision rules which include a preference for social and environmental value without neglecting financial value. In addition, we derive a tilting factor for companies that not only want to optimise new investments, but also want to correct past underinvestment in social and environmental value.

Suggested Citation

  • De Adelhart Toorop, Reinier & Schoenmaker, Dirk & Schramade, Willem, 2021. "Decision rules for corporate investment," CEPR Discussion Papers 16074, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:16074
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP16074
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    ;

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

    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:cpr:ceprdp:16074. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CEPR (email available below). General contact details of provider: https://cepr.org/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.