The E-axes Forum on Climate Change, Macroeconomics, and Finance

Jan Starmans

“The Pace of Change: Socially Responsible Investing in Private Markets”

Young Scholars' Webinar on Climate Finance and Economics

The authors of this paper study the pace at which socially responsible investors generate impact in private capital markets. Investors with broad pro-social preferences care about firm externalities independent of their ownership in the firm and hence value acquiring firms with high negative production externalities because they can reform these firms. The anticipation of trading gains for firms with high negative externalities decreases the incentive of current firm owners to reduce these externalities proactively, potentially causing delay in reform. Investment mandates through which investors can commit to paying a premium for firms with low negative externalities can incentivize reform in a timely manner.

Moderator:

Ishita Sen
Assistant Professor of Finance Harvard Business School

Organizing Committee

Michael Barnett, Arizona State University
Diego Känzig, Northwestern University
Alissa M. Kleinnijenhuis, Cornell University
Ishita Sen, Harvard Business School

Jan Starmans

Jan Starmans is an Assistant Professor at the Department of Finance at the Stockholm School of Economics. His research interests lie in corporate finance, sustainable finance, contract theory, and search theory. He received his PhD in Finance from London Business School. He teaches the course “Sustainable Finance” in the Master in Finance program and the course “Theoretical Corporate Finance” in the PhD program.

Paper and slides

The Pace of Change: Socially Responsible Investing in Private Markets (Paper)

The Pace of Change: Socially Responsible Investing in Private Markets (Slides)

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