Exit vs. Voice

Exit vs. Voice

Eleonora Broccardo, Oliver Hart, Luigi Zingales

Series number :

Serial Number: 

Date posted :

September 01 2020

Last revised :

September 01 2020
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  • exit • 
  • voice • 
  • social responsibility • 
  • Divestment • 
  • Boycott • 
  • engagement

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.


Real name:
Eleonora Broccardo
Real name:
Fellow, Research Member
Department of Economics, Harvard University