Gollier and Pouget (2010)

Gollier, Christian and Pouget, Sébastien.  “Asset Pricing and Corporate Behavior with Socially Responsible Investors.”  Working paper (Institut d'Économie Industrielle (IDEI), Toulouse, France), 2010.

Authors' abstract:  "We examine the functioning of financial markets when firms can invest in socially responsible activities that produce a positive externality at a cost. We examine a model in which some investors are socially responsible: they take these externalities into account when they value their portfolio, whether they believe that these externalities will materialize into better long-run performance or whether they are altruistic. There are two mechanisms by which these socially responsible investors can influence firm’s decisions. They can vote with their feet, thereby raising the cost of capital of non-responsible firms. They can also try to get the majority of shares to impose their view to the management. We also examine a model in which there exists a large investor who can act strategically to influence the beliefs of atomistic investors about his vote. We show that an increase in the degree of pro-social orientation of the large investor may raise its purely financial profit."


Link (2012 draft):  https://www.tresor.economie.gouv.fr/Ressources/File/381001