The PRI Academic Seminar Series invites leading ESG experts to present their research to academic scholars and investors.
The aim of the series is to:
- give world thought leaders in responsible investing the opportunity to present their work and obtain valuable feedback
- provide an opportunity to junior scholars to network with the speaker and obtain career advice
- be more inclusive and strengthen our global PRI Academic Network community throughout the year
Phillip Krueger, 19 March 2021
Paper: The Sustainability Wage Gap
Abstract: Using administrative employer-employee matched data, we provide evidence that workers earn substantially lower wages in more sustainable firms. Examining both cross-sectional and time-series heterogeneity, we find that the wage gap is larger for high-skilled workers and increasing over time. We hypothesize that this Sustainability Wage Gap arises because workers with preferences for sustainability accept lower wages to work in more environmentally sustainable firms. Using a battery of additional tests, we argue that our results are difficult to reconcile with many alternative interpretations suggested in prior research such as a better work-life balance or better career opportunities.
About Phillip Krueger
Philipp Krüger is a Professor of Responsible Finance at the University of Geneva (GSEM, GFRI) and holds a Senior Chair at the Swiss Finance Institute. After studying Economics and Finance in Germany, the United States, and France, he graduated with a PhD in Economics from the Toulouse School of Economics in 2010.
Hao Liang, 26 February 2021
Paper: Disaster Relief, Inc
Abstract: We investigate the motivations and value implications of corporate philanthropy by exploiting a global sample of publicly listed firms from 45 countries that provide disaster-relief grants to affected communities. We argue that, while in general corporate philanthropy entails agency concerns, the saliency of large, attention-grabbing natural disasters amplifies the strategic benefits of donating.
We find that the returns from donating increase with disaster severity and become positive for firms that rely more on reputation and social image. Returns are also higher for countries with low government relief support, for medium-sized donations, and for in-kind donations. Overall, our results highlight the strategic role of corporate philanthropy, which can lead to net increases in firm value and societal welfare if the strategic benefits of donating are sufficiently large.
Hao is Associate Professor of Finance and DBS Sustainability Fellow at Lee Kong Chian School of Business and Singapore Management University,
Renée Adams, 12 February 2021
Paper: Shareholders and Stakeholders Around the World: The Role of Values, Culture, and Law in Directors’ Decisions
Abstract: This study sets out to examine the relative importance of legal and cultural institutions and personal values in directors’ discretion. We present first evidence on the way personal and institutional factors together guide public company directors in decision-making concerning shareholders and stakeholders. In a sample comprising more than nine hundred directors from over fifty countries of origin, we confirm that directors hold a principled, quasi-ideological stance towards shareholders and stakeholders, called shareholderism. Directors’ shareholderism correlates with personal values, but also with cultural norms that are consistent with entrepreneurship. Among legal factors, only creditor protection exhibits a negative correlation with shareholderism, as theory would suggest, while general legal origin and proxies for shareholder and employee protection are unrelated to it.
Renée is Professor of Finance at the Saïd Business School, University of Oxford.
Patrick Bolton, 29 January 2021
Paper: Global Pricing of Carbon-Transition Risk
Abstract: Companies are exposed to carbon-transition risk as the global economy transitions away from fossil fuels to renewable energy. We estimate the market-based premium associated with this transition risk at the firm level in a cross-section of over 14,400 firms in 77 countries. We find a widespread carbon premium—higher stock returns for companies with higher levels of carbon emissions (and higher annual changes)—in all sectors over three continents, Asia, Europe, and North America. Short-term transition risk is greater for firms located in countries with lower economic development, greater reliance on fossil energy, and less inclusive political systems. Long-term transition risk is higher in countries with stricter domestic, but not international, climate policies. However, transition risk cannot be explained by greater exposure to physical (or headline) risk. Yet, raising investor awareness about climate change amplifies the level of transition risk.
Patrick is Barbara and David Zalaznick Professor of Business at the Columbia Business School at Columbia University.
Laura Starks, 4 December 2020
Paper: Climate Regulatory Risks and Corporate Bonds
Abstract: Examining how climate and other environmental regulatory risks affect bond risk and pricing, we find that bond credit ratings and yield spreads appear to be influenced by a firm’s environmental performance along with its regulatory conditions. Firms with poor environmental profiles tend to have lower credit ratings and higher yield spreads, particularly when the firm is located in a state with more stringent environmental regulations. Using the Paris Agreement as a shock to expected climate regulation, we provide evidence of a causal relation between climate regulatory risks and the credit ratings and yield spreads of bonds with problematic environmental profile.
Laura is the Charles E. and Sarah M. Seay Regents Chair in Finance, McCombs School of Business, University of Texas at Austin.
Luigi Zingales, 6 November 2020
Paper: Exit vs. Voice
Abstract: We study the relative effectiveness of exit (divestment and boycott) and voice (engagement) strategies in promoting socially desirable outcomes in companies. We show that in a competitive world exit is less effective than voice in pushing firms to act in a socially responsible manner. Furthermore, we demonstrate that individual incentives to join an exit strategy are not necessarily aligned with social incentives, whereas they are when well-diversified investors are allowed to express their voice. We discuss what social and legal considerations might sometimes make exit preferable to voice.
Luigi is the Robert C. McCormack Distinguished Service Professor of Entrepreneurship and Finance, and Charles M. Harper Faculty Fellow, Booth School of Business, University of Chicago