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Authors: Elisabeth Kempf, Oliver Spalt


We study how a representative sample of the U.S. population evaluates the morality of a broad range of corporate actions. The corporate actions we consider include decisions recently emphasized in relation to environmental, social, and governance (ESG) concerns, as well as other classic textbook decisions related to maximizing firm value. Our core findings are that: (i) all corporate actions we consider are perceived to be not just financial but also moral issues; (ii) many classic finance textbook issues, such as CEO pay, value-enhancing layoffs, wage reductions, legal corporate tax avoidance, and outsourcing decisions, are perceived to be significantly more of a moral issue than the ESG components emphasized in current executive pay contracts (e.g., renewable energy usage and workforce diversity); (iii) participants trade off moral concerns against monetary costs; (iv) shareholders have a greater willingness to pay for morally desirable corporate actions than customers or employees. Although we observe significant and plausible heterogeneity across participants in the absolute importance given to moral considerations, the relative ranking of the morality of different corporate actions is surprisingly stable across participants. Our results have broad implications for theoretical and empirical work in financial economics, as well as for finance practitioners.

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