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Publications
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- 2022
- Book
Purpose + Profit: How Business Can Lift Up the World
By: George Serafeim
The roadmap and best practices to reap the enormous value that can emerge when your business prioritizes social and environmental goals—such as climate change, diversity and inclusion, and sustainability—right alongside the pursuit of profit.
We not only... View Details
We not only... View Details
- 2022
- Working Paper
Retail Investors’ Contrarian Behavior Around News, Attention, and the Momentum Effect
By: Cheng (Patrick) Luo, Enrichetta Ravina, Marco Sammon and Luis M. Viceira
Using a large panel of U.S. brokerage accounts trades and positions, we show that a large fraction of retail investors trade as contrarians after large earnings surprises, especially for loser stocks, and that such contrarian trading contributes to post earnings...
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- March 2022 (Revised April 2023)
- Case
Hometown Foods: Changing Price Amid Inflation
During the early part of the 2021 Covid-19 pandemic, Hometown Foods, a large seller of flour-based products, thrived as consumers hoarded baked goods and took up baking to pass the time and find comfort. Then, amid growing shortages in commodities, a vaccine arrived,...
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- 2022
- Working Paper
Heterogeneous Investors and Stock Market Fluctuations
By: Odhrain McCarthy and Sebastian Hillenbrand
We introduce a heterogeneous agent model which features extrapolative beliefs and time-varying risk aversion. The model leads to an empirical framework which we estimate with stock prices, survey data and risk aversion measures. We find that extrapolative beliefs and...
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- 2023
- Working Paper
What Drives Variation in Investor Portfolios? Estimating the Roles of Beliefs and Risk Preferences
We present an empirical model of portfolio choice that allows for nonparametric estimation
of investors’ (subjective) expectations and risk preferences. Using a comprehensive
dataset of 401(k) plans from 2009 through 2019, we explore the heterogeneity in asset...
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- Article
Decarbonization Factors
By: Alex Cheema-Fox, Bridget LaPerla, George Serafeim, David Turkington and Hui (Stacie) Wang
In the face of accelerating climate change, investors are making capital allocations seeking to decarbonize portfolios by reducing the carbon emissions of their holdings. To understand the performance of portfolio decarbonization strategies and investor behavior...
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- 2021
- Book
The Power of Trust: How Companies Build It, Lose It, Regain It
By: Sandra J. Sucher and Shalene Gupta
Trust is the most powerful force underlying the success of every business. Yet it can be shattered in an instant, with a devastating impact on a company’s market cap and reputation. How to build and sustain trust requires fresh insight into why customers, employees,...
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Keywords:
Power;
Corporate Culture;
Future Of Work;
Innovation;
Technology Strategy;
Automation;
Stakeholder Engagement;
Employee Attitude;
Customer Behavior;
Shareholder Value;
Government And Business;
Impact Investing;
Corporate Change And Sustainability;
Trust;
Power and Influence;
Globalization;
Leadership;
Organizational Culture;
Innovation and Invention;
Human Resources;
Information Technology;
Strategy;
Corporate Accountability;
Asia;
Europe;
South America;
Middle East;
North and Central America
- 2021
- Working Paper
Once Bitten, Twice Shy: Learning from Corporate Fraud and Corporate Governance Spillovers
By: Trung Nguyen
This paper finds that investors learn from their experience with corporate fraud and financial misconduct and modify their investment behavior to avoid suspicious firms and increase corporate governance efforts. More specially, mutual funds that experienced corporate...
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- May 2021
- Article
The Firm Next Door: Using Satellite Images to Study Local Information Advantage
By: Jung Koo Kang, Lorien Stice-Lawrence and Forester Wong
We use novel satellite data that track the number of cars in the parking lots of 92,668 stores for 71 publicly listed U.S. retailers to study the local information advantage of institutional investors. We establish car counts as a timely measure of store-level...
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- Spring 2021
- Article
Corporate Resilience and Response During COVID-19
By: Alex Cheema-Fox, Bridget LaPerla, George Serafeim and Hui (Stacie) Wang
The coronavirus pandemic caused a sharp market decline while raising heterogeneous responses across companies related to their employees, supply chain, and repurposing of operations to provide needed products and services. We study whether during the 2020 COVID-19...
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Keywords:
ESG;
COVID-19;
Coronavirus;
Crisis Response Plans;
Crisis;
ESG (Environmental, Social, Governance) Performance;
ESG Ratings;
Leadership & Corporate Accountability;
Big Data;
Machine Learning;
Investor Behavior;
Institutional Investors;
Corporate Performance;
Health Pandemics;
Crisis Management;
Corporate Social Responsibility and Impact;
Human Capital;
Supply Chain;
Operations;
Leadership;
Corporate Accountability;
Institutional Investing;
Performance
- May 2020
- Article
To Be or Not to Be Your Authentic Self? Catering to Others' Expectations and Interests Hinders Performance
By: Francesca Gino, Ovul Sezer and Laura Huang
When approaching interpersonal first meetings (e.g., job interviews), people often cater to the target’s interests and expectations to make a good impression and secure a positive outcome such as being offered the job (pilot study). This strategy is distinct from other...
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- December 2019 (Revised March 2020)
- Case
Impossible Foods
By: Jose B. Alvarez and Natalie Kindred
Impossible Foods founder and CEO Pat Brown started the company out of concern over livestock production’s impact on climate change. Impossible’s mission is to end consumption of animals by 2035, and its strategy is to develop and market plant-based foods so similar to...
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Keywords:
Agribusiness;
Food;
Consumer Behavior;
Behavior;
Venture Capital;
Technological Innovation;
Innovation Strategy;
Entrepreneurship;
Marketing Strategy;
Distribution;
Production;
Product Development;
Product Positioning;
Growth Management;
Global Strategy;
Competition;
Climate Change;
Environmental Sustainability;
Animal-Based Agribusiness;
Agriculture and Agribusiness Industry;
Technology Industry;
Food and Beverage Industry;
Consumer Products Industry;
United States;
China;
Asia;
California;
Hong Kong;
Taiwan
- 2020
- Working Paper
How ESG Issues Become Financially Material to Corporations and Their Investors
By: George Serafeim
Management and disclosure of environmental, social and governance (ESG) issues have received substantial interest over the last decade. In this paper, we outline a framework of how ESG issues become financially material, affecting corporate profitability and valuation....
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Keywords:
Materiality;
ESG;
Pharmaceutical Companies;
Business Ethics;
Sustainability;
Environment;
Disclosure;
Disclosure And Access;
Regulation;
Social Impact;
Environmental Sustainability;
Social Issues;
Corporate Governance;
Ethics;
Corporate Disclosure;
Corporate Accountability;
Resource Allocation;
Finance;
Accounting;
Valuation
- October–November 2019
- Article
A New Perspective on Post-Earnings-Announcement-Drift: Using a Relative Drift Measure
By: Michael Clement, Joonho Lee and Kevin Ow Yong
Prior research finds that there is a delayed reaction to both analyst-based earnings surprises and random-walk-based earnings surprises. Focusing on the market reaction from the post-announcement window, prior studies show that analyst-based drift is larger than random...
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- 2019
- Working Paper
Decarbonization Factors
By: Alex Cheema-Fox, Bridget LaPerla, George Serafeim, David Turkington and Hui (Stacie) Wang
In the face of accelerating climate change, investors are making capital allocations seeking to decarbonize portfolios by reducing the carbon emissions of their holdings. To understand the performance of portfolio decarbonization strategies and investor behavior...
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- September 2019
- Article
The Self-Presentational Consequences of Upholding One's Stance in Spite of the Evidence
By: Leslie John, Martha Jeong, Francesca Gino and Laura Huang
Five studies explore the self-presentational consequences of refusing to “back down” – that is, upholding a stance despite evidence of its inaccuracy. Using data from an entrepreneurial pitch competition, Study 1 shows that entrepreneurs tend not to back down even...
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- July 2019
- Article
Market Reaction to Mandatory Nonfinancial Disclosure
By: Jody Grewal, Edward J. Riedl and George Serafeim
We examine the equity market reaction to events associated with the passage of a directive in the European Union (EU) mandating increased nonfinancial disclosure. These disclosures relate to firms’ environmental, social, and governance (ESG) performance and would be...
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Keywords:
Nonfinancial Information;
Nonfinancial Performance;
ESG;
ESG (Environmental, Social, Governance) Performance;
Investor Behavior;
Disclosure;
Disclosure Regulation;
Regulation;
Sustainability;
Corporate Performance;
Information;
Corporate Disclosure;
Governing Rules, Regulations, and Reforms;
Performance;
Environmental Sustainability;
Corporate Governance;
Outcome or Result
- Editorial
3 Ways Investors Can Pressure Companies to Take Sustainability Seriously
By: Mindy Lubber and George Serafeim
- 2019
- Working Paper
Reflexivity in Credit Markets
By: Robin Greenwood, Samuel G. Hanson and Lawrence J. Jin
Reflexivity is the idea that investors' biased beliefs affect market outcomes, and that market outcomes in turn affect investors' beliefs. We develop a behavioral model of the credit cycle featuring such a two-way feedback loop. In our model, investors form beliefs...
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- 2018
- Book
A Crisis of Beliefs: Investor Psychology and Financial Fragility
By: Nicola Gennaioli and Andrei Shleifer
The collapse of Lehman Brothers in September 2008 caught markets and regulators by surprise. Although the government rushed to rescue other financial institutions from a similar fate after Lehman, it could not prevent the deepest recession in postwar history. A...
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