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The price of unsustainability: An experiment with professional private equity investors

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  • Patricia Crifo

    (Department of Economics, Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique, UPN - Université Paris Nanterre, CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal)

  • Vanina Forget

    (Department of Economics, Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique, AgroParisTech)

  • Sabrina Teyssier

    () (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique)

Abstract

This paper sheds light on the impact sustainable and unsustainable corporate practices have on equity financing. We present a unique framed field experiment in which professional private equity investors competed in closed auctions to acquire fictive firms. We hence observe that corporate non-financial performance impacts firm valuation and investment decision and we quantify to which extent. Main result is an asymmetric effect, entrepreneurs having more to lose from unsustainable practices than to gain from sustainable ones. Our findings are discussed in terms of practical implications for both investors and firm managers.

Suggested Citation

  • Patricia Crifo & Vanina Forget & Sabrina Teyssier, 2012. "The price of unsustainability: An experiment with professional private equity investors," Working Papers hal-00757203, HAL.
  • Handle: RePEc:hal:wpaper:hal-00757203
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00757203
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    References listed on IDEAS

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