The Moral Architecture of the Firm: Purpose, Incentives, and Governance Structures
Paper Session
Sunday, Jan. 4, 2026 8:00 AM - 10:00 AM (EST)
- Chair: Sarah Hamersma, Syracuse University
Why Does Corporate Purpose Cause Employees to be More Productive?
Abstract
A theoretical paper examining how firms that seek to instrumentalize purpose risk undermining it, and how specific organizational structures and incentives can preserve authenticity and stakeholder trust.Does Corporate Purpose Conflict With Shareholder Returns?
Abstract
This paper studies the link between purpose statements and future shareholder returns. We use deep neural networks to identify a “purpose statement” as one that views stakeholder value as a means to ultimately improve shareholder value, in contrast to “purpose-like” statements that put shareholders and stakeholders on an equal footing. A value-weighted portfolio of companies with purpose statements earns a 0.3% monthly alpha above characteristics benchmarks; a long-short portfolio that buys firms with purpose statements and sells those with purpose-like statements earns a 0.28% monthly alpha. Purpose statements are positively linked to future earnings surprises, suggesting a channel through which they lead to higher stock returns, but purpose-like statements are not. They are positively associated with unvested but not vested CEO equity ownership, suggesting that long-term equity more effectively aligns managers with shareholders’ long-term interests.Corporate Governance and the Moral Ecology of Stakeholder Flourishing
Abstract
This paper explores how governance structures shape the moral ecology of the firm and influence stakeholder flourishing. Drawing on virtue ethics and Catholic Social Teaching, we propose a framework for diagnosing how ownership forms and institutional arrangements afford or constrain the cultivation of role-differentiated virtue. Governance is not merely a mechanism of control but a formative ecology that shapes behavior, character, and ultimately value creation. We distinguish between goods that can be pursued instrumentally and those—such as trust, purpose, and moral commitment—that are authenticity-dependent. Just as Hart and Zingales (2017) argue that shareholder welfare cannot be reduced to financial wealth when externalities are present, we argue that stakeholder welfare cannot be reduced to wages or consumption when relational and moral goods drive productivity. These goods, unlike other externalities, are intent-dependent and dissolve when pursued purely as means. Our framework introduces the concept of eudaimonic efficiency: aligning firm purpose, structure, and moral formation to support value creation and human flourishing.Discussant(s)
Eric Orts
,
University of Pennsylvania
Claudine Gartenberg
,
University of Pennsylvania
Quentin DuPont
,
Georgetown University
Tom Donaldson
,
University of Pennsylvania
JEL Classifications
- G3 - Corporate Finance and Governance
- D6 - Welfare Economics