Shareholder Preferences, Discount Rates, and Corporate Investment
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Series
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SpeakersJoseph Zechner (WU Vienna, Austria)
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FieldFinance, Accounting and Finance
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LocationUniversity of Amsterdam, Roeterseiland campus, building M, room 3.02
Amsterdam -
Date and time
October 28, 2026
16:00 - 17:15
Abstract
Investors’ non-pecuniary preferences move firms’ market-implied discount rates. This paper analyzes whether these values-based differences reach the discount rates managers use for capital budgeting. In an integrated q-theoretic model, managers partially internalize shareholders’ valuation of firms’ externalities. Inferring managerial discount rates from investment rather than what managers say, we find the managerial greenium is one-third of the market’s, and ESG, not financial risk, explains the gap. It shrinks steeply with governance quality and is largest for brown firms. By separating this values-based component, our model also provides a novel framework to analyze limited pass-through of market-implied rates to hurdle rates. Joint paper with Jin Yu.