Abstract:
We examine the economic value of investors' moral judgments about firms that engage in unethical behaviour and investigate factors that may influence these judgments. Through a series of experimental studies, the research explores how investors judge and economically punish unethical actions attributed to firms versus individuals, how personal benefit affects moral judgments and willingness to impose financial sanctions, and the underlying motivations behind investors' punitive responses to corporate misconduct.
Key findings indicate that individuals are judged and punished more harshly than abstract firms for similar unethical acts. Investors express more sympathy towards individual victims compared to harmed companies. Personal benefit from unethical behaviour does not affect judgments of its morality but does lead to more lenient financial sanctions, especially for prosocial motives. Investors care about firms' ethical conduct and punish misconduct due to both moral and economic concerns.