Beyond Numbers: How Investment Managers Accommodate Societal Issues in Financial Decisions

Arjaliès, D-L. and Bansal T. (2018), Beyond Numbers: How Investment Managers Accommodate Societal Issues in Financial Decisions, Organization Studies, 39, 695-725

45 Pages Posted: 12 Feb 2018 Last revised: 26 May 2018

See all articles by Diane-Laure Arjaliès

Diane-Laure Arjaliès

Ivey Business School at Western University

Pratima (Tima) Bansal

University of Western Ontario - Richard Ivey School of Business

Date Written: February 8, 2018

Abstract

Investment managers use financial numbers to assess the quality of their portfolios, which requires them to estimate the market value of their assets-i.e., the priced trading of such assets. Prior research has shown that investment managers tend to disregard information that does not easily integrate into financial numbers, such as environmental, social and governance (ESG) criteria. We argue that when investment managers use visuals to incarnate ESG criteria, they are more likely to accommodate societal issues in their financial decisions. We undertook a three-year ethnography of an asset management company to better understand how investment managers respond to ESG criteria. We found that fixed-income investment managers attempted to include ESG criteria in their financial models by financializing the data, so that ESG-related information could be commensurated with their existing models. Equity investment managers, on the other hand, did not financialize ESG issues, but introduced the use of visuals, specifically emojis, to incarnate ESG issues. In this way, ESG criteria were juxtaposed with, rather than integrated into, financial criteria. In doing so, equity managers created a sense of dissonance between financial numbers and the visuals, which fostered creative friction. The visuals permitted equity managers to analyze the ESG criteria not only for their financial insights, but also for the social and environmental information that could not be financialized. We discuss the implications of these findings for prior research on financialization and calculative devices.

Keywords: calculative devices, dissonance, equity, financialization, fixed-income, socially responsible investment (SRI), visuals

JEL Classification: M10, M41, Z13

Suggested Citation

Arjaliès, Diane-Laure and Bansal, Pratima, Beyond Numbers: How Investment Managers Accommodate Societal Issues in Financial Decisions (February 8, 2018). Arjaliès, D-L. and Bansal T. (2018), Beyond Numbers: How Investment Managers Accommodate Societal Issues in Financial Decisions, Organization Studies, 39, 695-725 , Available at SSRN: https://ssrn.com/abstract=3120650

Diane-Laure Arjaliès (Contact Author)

Ivey Business School at Western University ( email )

London, Ontario
Canada

HOME PAGE: http://www.ivey.uwo.ca/faculty/directory/diane-laure-arjalies/

Pratima Bansal

University of Western Ontario - Richard Ivey School of Business ( email )

London, Ontario
Canada

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