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

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  • Holm, Claus

    (Department of Management Science and Logistics, Aarhus School of Business)

  • Rikhardsson, Pall

    (Department of Management Science and Logistics, Aarhus School of Business)

Abstract

This paper examines the effect of environmental information on the investment decisions of investors. The motivation for the experimental design applied in this study is that unless actual decision making is observed, the potential usefulness of environmental information (or lack thereof) cannot be taken for granted. The study is based on an experiment where groups of investors (varied by experience) were asked to make investment allocation decisions based on financial information and on supplementary environmental information (varied between cases). As an investment allocation decision (varied by investment horizons) the groups were asked to allocate funds to two companies based on the available information. The findings suggest that environmental information has the potential to influence investment allocation decisions. The findings also suggest that the influence of environmental information on investment allocation decisions is mitigated by the variables considered explicitly in this study, i.e., the investment horizon (varied as short and long) and investor experience (varied as novice and experienced investor). It is concluded that because allocation decisions are multifaceted problems, mixed results related to the influence of environmental information should be expected

Suggested Citation

  • Holm, Claus & Rikhardsson, Pall, 2006. "Experienced and Novice Investors: Does Environmental Information Influence on Investment Allocation Decisions?," Financial Reporting Research Group Working Papers R-2006-02, University of Aarhus, Aarhus School of Business, Department of Business Studies.
  • Handle: RePEc:hhb:aarbfr:2006-002
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    References listed on IDEAS

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    Cited by:

    1. Holm, Claus & Schøler, Finn & Lønne, Henrik & Maingot, Michael, 2009. "A Study of the Adoption and Implementation of International Financial Reporting Standards in the Two EU Countries of Denmark and Ireland and New Zealand, a Non EU Country," Accounting Research Center Working Papers A-2009-01, University of Aarhus, Aarhus School of Business, Department of Business Studies.
    2. Christos Kollias & Stephanos Papadamou, 2016. "Environmentally Responsible and Conventional Market Indices’ Reaction to Natural and Anthropogenic Adversity: A Comparative Analysis," Journal of Business Ethics, Springer, vol. 138(3), pages 493-505, October.

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    More about this item

    Keywords

    Environmental reporting; Environmental disclosures; Allocation; Decision making; Investment horizon; Investors; Experiment;
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