Exit vs. Voice

Eleonora Broccardo, Oliver D. Hart, Luigi Zingales

We study the relative effectiveness of exit (divestment and boycott) and voice (engagement) strategies in promoting socially desirable outcomes in companies. We show that in a competitive world exit is less effective than voice in pushing firms to act in a socially responsible manner. Furthermore, we demonstrate that individual incentives to join an exit strategy are not necessarily aligned with social incentives, whereas they are when well-diversified investors are allowed to express their voice. We discuss what social and legal considerations might sometimes make exit preferable to voice

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Year of publication:	August 2020
Authors:	Broccardo, Eleonora
Other Persons:	Hart, Oliver D. (contributor) ; Zingales, Luigi (contributor)
Institutions:	National Bureau of Economic Research (contributor)
Publisher:	2020: Cambridge, Mass : National Bureau of Economic Research
Subject:	Corporate Social Responsibility \| Corporate social responsibility \| Desinvestition \| Disinvestment \| Protestbewegung \| Protest movement

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