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Are Responsible Investments Feasible?

Guillaume Vuillemey * Professeur associé de finance, HEC Paris ; chercheur associé, CEPR (Londres).Contact : vuillemey@hec.fr.


The “social responsibility” of investors is at the heart of a number of contemporary debates. This paper questions the past and the future of this concept. First, it shows that “socially responsible investment” is historically a contradiction in terms: the figure of the investor – who provides capital but does not participate to the management of a firm – could only appear when the liability of shareholders was limited. Understanding the revolution introduced by the generalization of limited liability helps to shed light on contemporary debates on “socially responsible” investment, and to highlight its limitations. Finally, this paper argues in favor of alternative, stronger, forms of investor liability. If implemented, these proposals would deeply change the structure of financial intermediation.


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