Altruism or profit maximising? Motivations of the demand for extra financial information.

Summary Drawing on altruism literature and studies on socially responsible investment (SRI) we explore graduate students’ altruist and profit motivation to consider extra financial information in a stock investment game. We follow a fully mixed concurrent equal status design. We rely on qualitative analysis of unstructured reports about the stock selection process to infer the set of motivations underlying ESG integration. Quantitative modelling allows for assessing whether motivation to integrate ESG analysis also results in more responsible investments by regressing the weights of top tier ESG companies in portfolios on motivation frequencies expressed in the reports. To evaluate contextual and more stable factors, we also include financial performance of portfolios in the regression analysis. We find that motivation induced by the expectation of a financial advantage is the main driver of ESG integration. The effect of financial motivation for ESG integration on ESG investments, however, is moderated by the financial performance in the following way: Investors who declared integrating ESG values for financial performance only had a greater share of top tier ESG companies in their portfolios when their portfolios underperformed the market. This result confirms and extends previous findings on SRI investor behaviour in down markets.