Financial Markets in the 21st Century: Three Essays on How Sustainability Accounting Shapes Investors' Valuation Judgments

In response to increasingly tangible climate change effects, evolving international climate agreements, and rising global inequality, sustainability has emerged as a critical issue in corporate and investor decision-making. This dissertation explores how sustainability accounting influences private investors’ valuation judgments, combining experimental and archival evidence across three independent but thematically connected research papers. Chapter 2 investigates how the degree of sustainability in investments affects private investors’ willingness to invest. Through a 2x2x2 experiment, the study finds that a higher degree of sustainability increases valuation judgments, particularly when return differences and certifications are considered. The mediating role of skepticism toward socially responsible investing is also examined. Chapter 3 explores the effect of corporate philanthropic disaster response (CPDR) on investor perceptions and valuation. An incentivized experiment shows that higher CPDR levels are perceived as genuine, leading to more favorable valuation judgments, whereas lower CPDR may be interpreted as opportunistic and negatively impact investor sentiment. Chapter 4 addresses the psychological appeal of “net zero” disclosures. Through an event study and three experiments, this chapter identifies a “net zero fallacy,” where investors prefer net zero emission projects even when they are less cost-efficient in reducing greenhouse gases. The findings highlight the influence of choice bracketing and suggest that investor education can mitigate such biases. Overall, this dissertation contributes to the literature on prosocial investment behavior and the integration of environmental, social, and governance (ESG) information into financial decision-making. It highlights how private investors balance sustainability with traditional financial considerations and underscores the behavioral mechanisms through which sustainability disclosures shape investment outcomes.