Cleansing investor’s conscience: the effects of incidental guilt on socially responsible investment decisions

Gevorkova, V., Sangiorgi, I. ORCID: https://orcid.org/0000-0002-8344-9983 and Vogt, J. ORCID: https://orcid.org/0000-0002-3178-2805 (2024) Cleansing investor’s conscience: the effects of incidental guilt on socially responsible investment decisions. Journal of Business Ethics, 193. pp. 89-114. ISSN 0167-4544 doi: 10.1007/s10551-023-05585-9

Abstract/Summary

This paper explores the effects of incidental guilt on Socially Responsible Investment (SRI) decisions of retail investors. Do investors who feel guilty invest more in SRIs to clear their conscience? Are guilty investors willing to sacrifice returns to restore their moral selves? Using survey data from an online quasi-experiment among a sample of U.S. retail investors, we find that individuals who experience incidental guilt are willing to invest more in SRI funds than those in a neutral state. We show that this effect, albeit moderate in magnitude, cannot be explained solely by differences in retail investors’ moral reasoning, attitudes towards social responsibility, risk tolerance and demographic factors. When presented with a trade-off between sustainability, risk and return characteristics of the funds, guilty investors are more willing to sacrifice returns for greater sustainability than non-guilty participants. Our research provides new evidence of the effect that incidental guilt has on the sustainable investing decisions of retail investors.

Additional Information	J.E.L. Classifications: G11, M14, A13, D91, C25
Item Type	Article
URI	https://reading-pure-test.eprints-hosting.org/id/eprint/114231
Identification Number/DOI	10.1007/s10551-023-05585-9
Refereed	Yes
Divisions	Central Services Henley Business School > Finance and Accounting Life Sciences > School of Psychology and Clinical Language Sciences > Department of Psychology
Additional Information	J.E.L. Classifications: G11, M14, A13, D91, C25
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