Investment Strategies and Corporate Behaviour with Socially Responsible Investors: A Theory of Active Ownership

Christian Gollier et Sébastien Pouget


Socially responsible investors constitute an important force in today’s global financial markets. This paper examines conditions under which socially responsible investors induce companies to behave responsibly. We develop an asset pricing model in which some shareholders are active owners, that is, they engage companies by voting on strategic decisions. Differences of objective among shareholders arise because socially responsible investors value corporate externalities. In our baseline model, we show that a firm may choose a responsible strategy even if the majority of investors are not responsible. We also demonstrate that such a choice of a responsible strategy might be fragile because it might depend on investors’ self-fulfilling beliefs. We then extend our baseline model to analyse the link between divestment and engagement strategies, the case with multiple firms, the role of benefit corporation charters, and the impact of a large investor.


Asset pricing; corporate social responsibility; socially responsible investments; corporate engagement; shareholder activism;

Codes JEL

  • G34: Mergers • Acquisitions • Restructuring • Corporate Governance
  • H23: Externalities • Redistributive Effects • Environmental Taxes and Subsidies


Christian Gollier et Sébastien Pouget, « The "Washing Machine": Investment Strategies and Corporate Behavior with Socially Responsible Investors », TSE Working Paper, n° 14-457, janvier 2014.


Christian Gollier et Sébastien Pouget, « Investment Strategies and Corporate Behaviour with Socially Responsible Investors: A Theory of Active Ownership », Economica, vol. 89, juin 2022, p. 997–1023.

Publié dans

Economica, vol. 89, juin 2022, p. 997–1023