Luigi Zingales, Robert C. McCormack Distinguished Service Professor of Entrepreneurship and Finance and the Charles M. Harper Faculty Fellow at the University of Chicago Booth School of Business
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.
Luigi Zingales is the Robert C. McCormack Distinguished Service Professor of Entrepreneurship and Finance and the Charles M. Harper Faculty Fellow at the University of Chicago Booth School of Business. In 2014 he was president of the American Finance Association. In July 2015 he became director of the Stigler Center at Chicago Booth, which promotes and diffuses research on regulatory capture and the various distortions special interest groups impose on capitalism. He also co-developed with Paola Sapienza the Financial Trust Index, designed to monitor Americans’ level of trust in their financial system. In January 2018, he launched Capitalisn’t, the Stigler Center podcast, now co-hosted with Bethany McLean, Contributing Editor of Vanity Fair.
Luigi Zingales’ research interests range from corporate governance and financial development to political economy and the economic effects of culture. Besides his position at Chicago Booth, Zingales is a faculty research fellow for the National Bureau of Economic Research and the European Governance Institute, and has been a research fellow for the Centre for Economic Policy Research. He also served as an editorialist for Italy’s Il Sole 24 Ore and has held positions with the Committee on Capital Markets Regulation and the Public Company Accounting Oversight Board (PCAOB).