Selfish Corporations” with Niels Gormsen

Abstract:

We conduct representative large-scale surveys of U.S. citizens aimed at measuring perceptions of Environmental, Social, and Governance (ESG) performance of large corporations and investigate how ESG perceptions affect the public support for corporate bailouts. The public demands more ESG-friendly policies than what they think corporations adopt. We call this discrepancy ESG- discontent. We then experimentally vary individual perceptions of ESG by showing animated videos aimed at highlighting the “bad” and the “good” of corporate ESG in recent years. We show that a higher ESG-discontent lowers support for bailouts. The effects are present across the whole political spectrum, but they are stronger for liberals than for conservatives, and they persist even a week after respondents were exposed to the videos. Informing respondents of the likely economic benefits of bailouts has opposite effects, but such effects are significantly weaker than the ESG treatment. A second randomized experiment shows that simply making individuals think about ESG also lowers support for bailouts. In an additional experiment we find individuals’ lower reported support for bailouts is also reflected in behavioral changes, as a higher ESG-discontent makes respondents less likely to sign an online petition or contact U.S. Senators to support corporate bailouts. Treated respondents are also less likely to donate to non-profit organizations supporting the general interests of executives of large U.S. corporations, indicating a farther-reaching impact of ESG perceptions on economic outcomes. Our findings suggest that the strength of the social contract between corporations and their stakeholders may impact the design and implementation of important economic policies.