Conform to the norm. Peer information and sustainable investments with Max Grossmann, Andreas Hackethal and Marten Laudi

Abstract: We conduct a field experiment with clients of a German universal bank to explore the impact of peer information on sustainable retail investments. Our results show that infor-mation about peers’ inclination towards sustainable investing raises the amount allocated to stock funds labeled sustainable, when communicated during a buying decision. This effect is primarily driven by participants initially underestimating peers’ propensity to invest sustainably. Further, treated individuals indicate an increased interest in addi-tional information on sustainable investments, primarily on risk and return expectations. However, when analyzing account-level portfolio holding data over time, we detect no spillover effects of peer information on later sustainable investment decisions.


Dirty Money. The Impact of Negative ESG News Sentiment on Dividend Consumption with Marten Laudi and Paul Smeets

2023: German Finance Association (DGF), Aarhus University, Center for Environmental Economics Montpellier

Abstract: Using a large European bank dataset, we show that in response to negative ESG news exposing controversial business practices of dividend-paying firms, investors amplify their consumption from dividend income, compared to dividends from non-controversial firms. This increased consumption is immediate, occurring on the dividend payout day. We control for selection effects and rule out attention and adjustments to the dividend payout size as mechanisms. Instead, our results are consistent with laboratory evidence showing that people who earn money by violating social norms counter resulting negative emotions with mood-enhancing behavior, such as increased consumption. This aligns with the principles of emotion regulation theory. We demonstrate the applicability of emotion regulation theory outside of the laboratory in an important real-world context, financial markets.


Local bank presence and household investments into green infrastructure

2023: Swiss Society for Financial Market Research (SGF)

Abstract: We show that the closure of bank branches results in less local installations of residential photovoltaic systems in Germany. The effect is driven by the closure of relationship banks, not transaction banks, indicating that better access to credit due to long-term relationships of borrowers with their banks is driving the result. Further, our findings indicate that banks’ own lending products substitute rather than complement government subsidies for green investments. This implies a double-edged role of bank branches for household investments into sustainable infrastructure and has implications for policies that aim to promote green household lending.


The impact of temporal framing on the marginal propensity to consume

2021: Verein für Socialpolitik, Online

Media Coverage: Spiegel Online

Abstract: We conducted a large-scale household survey in November 2020 to study how altering the time frame of a message (temporal framing) regarding an imminent positive income shock affects consumption plans. The income shock derives from the abolishment of the German solidarity surcharge on personal income taxes, effective in January 2021. We randomize across survey participants whether their extra disposable income is presented in Euros per month, Euros per year, or Euros per ten year-period. Our main findings are as follows: In General, we find our respondents’ intended Marginal Propensity to Consume (MPC) is 28.2%. Across all three treatments, the MPC is a positive function of age and being female while it is a negative function of the income increase’s size, self-control, and being unemployed. Temporal framing effects are statistically and economically highly significant as we find the monthly treatment groups’ average MPC 5.6 and 8.7 percentage points higher compared to the yearly and 10-yearly treatment groups. We will be able to analyze the real consumption behavior of households throughout 2021 based on re-surveying the participants as well as by using transaction-based bank data.


The Annual General Meeting revisited: The role of the CEO speech, with Christina Bannier and Andreas Walter.

2019: EFL Seminar, Frankfurt

2017: Verein für Socialpolitik, Vienna   |   DAFC, Lugano   |   VHB, Luzern 

2016: DGF PhD Workshop, Bonn

Abstract: We analyze the informational value of the Annual General Meeting (AGM) for investors’ decision-making. As the AGM is typically preceded by several information disclosures, previous research has shown it to trigger only a marginal market reaction. We consider the tone of the CEO’s speech as a hitherto overlooked feature using textual analysis and compile a unique comprehensive dataset of 457 German AGMs between 2008 and 2016. We show that the sentiment of the CEO speech is significantly related to subsequent return reactions and firm profitability, even when controlling for further AGM-related events. 


Trust and the supply side of financial advice, with Oscar Stolper and Andreas Walter. 

2016: World Finance Conference, New York 

2015: Deutsche Gesellschaft für Finanzwirtschaft (DGF) PhD Workshop, Leipzig

Abstract: In this study, we investigate how two key dimensions of trust formation, i.e. interpersonal trust in the advisor (narrow-scope trust) and broader trust in the business context in which the advisor operates (broad-scope trust), impact households’ overall trust in financial advice. To capture the potential influence of broad-scope trust, we make use of novel survey data obtained from the Panel on Household Finances (PHF) and contrast households’ propensity to trust financial advice provided by advisors employed at community banks versus large banks, which have been shown to feature fundamentally different trust profiles. We document that financial advice provided by large-bank advisors is significantly less likely to be trusted, thus rejecting the notion that trust in financial advice is essentially equivalent to trusting one’s financial advisor. Instead, we provide strong evidence in support of an integrated conceptualization of clients’ trust in financial advice, which highlights the importance of establishing broad-scope trust.