Green Investors and Corporate Investment

15 Pages Posted: 21 May 2009

See all articles by Amir Barnea

Amir Barnea

HEC Montreal

Robert L. Heinkel

University of British Columbia (UBC) - Division of Finance

Alan Kraus

University of British Columbia (UBC) - Division of Finance

Date Written: April 1, 2004

Abstract

Green or socially responsible investing (SRI) refers to making investment decisions according to both financial and ethical criteria. This paper explores the effects of ethical screening on the investment decisions of firms that fail the screen (‘polluting’ firms) and on their decisions to reform so as to pass the screen. These issues are examined in an equilibrium setting with endogenous investment decisions and endogenous future outputs.We find that green investors can induce polluting firms to reform and that SRI results in under-investing by polluting firms, which leads to lower total investment in the economy.

Keywords: Green investors, Corporate investment, Socially responsible investing (SRI), Corporate Social Responsibility

Suggested Citation

Barnea, Amir and Heinkel, Robert L. and Kraus, Alan, Green Investors and Corporate Investment (April 1, 2004). Structural Change and Economic Dynamics, Vol. 16, No. 3, 2005, Available at SSRN: https://ssrn.com/abstract=1407833

Amir Barnea (Contact Author)

HEC Montreal ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
514-340-7321 (Phone)
514-340-5632 (Fax)

Robert L. Heinkel

University of British Columbia (UBC) - Division of Finance ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8347 (Phone)
604-822-8521 (Fax)

Alan Kraus

University of British Columbia (UBC) - Division of Finance ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8342 (Phone)
604-822-8521 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
237
Abstract Views
1,476
rank
161,858
PlumX Metrics