Discussion paper

DP15176 Exit vs. Voice

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.


Broccardo, E, O Hart and L Zingales (2020), ‘DP15176 Exit vs. Voice‘, CEPR Discussion Paper No. 15176. CEPR Press, Paris & London. https://cepr.org/publications/dp15176