Investor preferences and ESG ratings
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2023-07-05
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en
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Abstract
The importance of SRI investment strategies is growing. ESG ratings are a measure of how well
a company performs on SRI issues. We know investors look to invest according to their social
preferences, and can use ESG ratings to do so. Little is known though about which dimensions of ESG
ratings they value most. This information can be valuable to companies. Companies can lower their
cost of capital by attracting more investors. More investors can possibly be attracted by improving
their E, S or G rating. This study uses a factorial survey with a sample of Dutch individuals. This is to
learn if ESG ratings are material to the likelihood to invest, and which of the three dimensions is most
important to investors. Results show respondents in this study significantly positively valued
companies with higher environmental and social ratings. But governance ratings had no significant
effect. The results imply that companies looking to improve their ratings to interest new investors
should prioritize on increasing their environmental and social rating.
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Faculteit der Managementwetenschappen