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Corporate Intent

Author

Listed:
  • Augustin Landier
  • Parinitha R. Sastry
  • David Thesmar

Abstract

Do investors care about why a firm behaves responsibly, over and above what the firm does and how much cash it earns? In our main experiment, participants value shares in companies that reduce pollution relative to peers, while CEOs articulate the company’s intentions: prosocial or for-profit. Investors are willing to pay more for shares in a company that takes a given prosocial action if it is motivated by social concern rather than profit maximization. This "intention premium" is distinct from the valuation effects of cash flows and environmental externalities. Respondents who are deontological, politically liberal, female, or less individualistic value the company’s intent the most. Additionally, and somewhat surprisingly, respondents view favorably firms that embrace both profit and social objectives, without ranking them. Overall, our findings temper claims that when there is no financial trade-off between doing good and doing well, shareholder value and stakeholder value maximization are equivalent.

Suggested Citation

  • Augustin Landier & Parinitha R. Sastry & David Thesmar, 2026. "Corporate Intent," NBER Working Papers 34676, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34676
    Note: CF
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    More about this item

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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