Private Sanctions / Oliver D. Hart, David Thesmar, Luigi Zingales.

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Hart, Oliver D

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w30728.Publication details: Cambridge, Mass. National Bureau of Economic Research 2022.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: We survey a representative sample of the U.S. population to understand stakeholders' desire to see their firms exit Russia after the invasion of Ukraine. 61% of respondents think that firms should exit Russia, regardless of the consequences. Only 37% think that leaving Russia is a purely business decision. If a firm does not conform with these desires, 66% of the respondents are willing to boycott it. This desire diminishes with the costs they face in boycotting. At $500, 43% would want to boycott. This propensity to boycott is high, even for participants who are told they have no impact, suggesting strong deontological concerns. Nevertheless, it is difficult to separate deontological and consequentialist motives to boycott, because subjects' beliefs about "impact" are highly correlated with their willingness to act "whatever the consequences". When we randomize beliefs about impact, we find a clear effect for shareholders, but not for the other stakeholders. We discuss what are the geopolitical and economic implications of a world where private corporations may discontinue profitable business relationships for moral or political reasons.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w30728 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w30725 The Importance of Modeling Income Taxes Over time. U.S. Reforms and Outcomes /	nber w30726 Noise-Robust De-Duplication at Scale /	nber w30727 A Fiscal Theory of Trend Inflation /	nber w30728 Private Sanctions /	nber w30729 FDI Inflows and Domestic Firms: Adjustments to New Export Opportunities /	nber w3073 Election Polls, Free Trade, and the Stock Market: Evidence from the Canadian General Election /	nber w30730 Managers and the Management of Organizations /	Next

December 2022.

We survey a representative sample of the U.S. population to understand stakeholders' desire to see their firms exit Russia after the invasion of Ukraine. 61% of respondents think that firms should exit Russia, regardless of the consequences. Only 37% think that leaving Russia is a purely business decision. If a firm does not conform with these desires, 66% of the respondents are willing to boycott it. This desire diminishes with the costs they face in boycotting. At $500, 43% would want to boycott. This propensity to boycott is high, even for participants who are told they have no impact, suggesting strong deontological concerns. Nevertheless, it is difficult to separate deontological and consequentialist motives to boycott, because subjects' beliefs about "impact" are highly correlated with their willingness to act "whatever the consequences". When we randomize beliefs about impact, we find a clear effect for shareholders, but not for the other stakeholders. We discuss what are the geopolitical and economic implications of a world where private corporations may discontinue profitable business relationships for moral or political reasons.