Resumo:
Introduction: Environmental, Social and Governance (ESG) practices have gained a
prominent role in investment decisions and in the evaluation of firms by different stakeholders.
Although the literature has investigated the effects of adopting these practices, there is still
limited evidence on how investors react when ESG initiatives are discontinued. Studies that
examine this phenomenon through experimental designs are even scarcer, especially in
developing countries, which are characterized by higher market volatility, distinct institutional
structures, and less mature capital markets. In this context, the following research question
emerges: how do investors react to the interruption of ESG projects compared to the interruption
of general business projects, considering the life cycle of the initiatives? Aim: To investigate,
through an experimental design, investors’ reactions to the interruption of ESG projects
compared to the interruption of general business projects, considering the life cycle of both
initiatives. Methodology: The study adopted a 2 × 2 experimental design applied to an initial
population of 231 participants classified as investors, consisting of graduate students (lato sensu
and stricto sensu) and members of Finance Leagues from universities located in three Brazilian
states (Bahia, São Paulo, and Sergipe). After exclusions due to not qualifying as investors or
not understanding the experiment, the final sample consisted of 162 participants. The analyses
included mean comparison tests, ANOVA, multiple regressions, and tests with moderating
variables, aiming to identify the effects of the market, customers, and workers on investors’
reactions. Results: The results indicated that investors react more positively to the launch of
conventional business initiatives, possibly because they associate these initiatives with
increased financial performance and shareholder returns. Regarding interruptions, the findings
show that the discontinuation of ESG projects generates a more negative reaction than the
discontinuation of traditional initiatives, suggesting that investors interpret the decision as a
waste of resources and as a negative signal to the market and other stakeholders. Furthermore,
the interruption may be perceived as a breach of a previously assumed socio-environmental
commitment, which triggers ethical and moral judgments. Contributions: The findings
contribute to the advancement of the literature on behavioral finance, ESG, and decisionmaking, while also offering practical implications for organizations seeking to align
sustainability with value creation. Moreover, the results clarify how distinct types of initiatives
are perceived by investors, providing insights for companies, regulators, and policymakers
regarding the disclosure and management of socio-environmental practices.
