How market participants respond to corporate disclosure forms an important cornerstone in many areas of accounting and finance research. This article synthesizes behavioral research on how an increasingly important type of corporate disclosure, namely corporate social responsibility (CSR) disclosure, affects investor behavior. Structuring the extant accounting and finance literature, we derive a holistic framework that consolidates observed drivers of investors' information processing and resulting investment decision making when confronted with CSR disclosure. We identify both disclosure and individual investor characteristics that determine investor behavioral response to disclosed CSR-related information. Drawing on the proposed framework, we pinpoint knowledge gaps in the literature and provide guidelines for further research. Fundamental issues for future work include the decoupling of specific behavioral drivers through innovative measurement, the reliable identification of causal effects, and the incorporation of investors' social interactions.
Financial markets play a decisive role in the transition to a low-carbon economy. This study investigates the role of climate information presentation for climate-friendly investing among retail investors. We conduct a choice experiment in which we vary the presentation format of climate information by means of three label designs to test their influence on investment practices. We provide empirical evidence for the effectiveness of climate labeling as a potential nudge for climate-friendly investing. Furthermore, we find heterogeneity in the influence of climate information across different label designs and cognitive characteristics of investors. Intuitive (reflective) decision makers tend to place significantly more (less) weight on funds’ climate performance compared with financial performance—irrespective of a participant’s environmental preference.
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