Decision Rules for Corporate Investment^†

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The manuscript must be improved before it goes for publication.

Comments for author File: Comments.pdf

Author Response

Please see my comments to reviewer 1.

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

The paper deals with the relatively common topic of environmental and social impacts on the value of a company. This topic is currently frequent in scientific and professional publications. For this reason, I assess the novelty of the article only as average. However, what needs to be highlighted is the specific approach to evaluating investment decisions with regard to non-financial aspects. The idea of the paper and the approach to its processing are at a very high level. From my perspective, the paper does not have significant shortcomings; from a conceptual, content, and formal standpoint, it meets the criteria for publication in a scientific journal.

Author Response

Please see my response to reviewer 2

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

I like the paper. The idea that SEV can be an objective a corporation also trying to maximize is important for the new age of corporate governance and investment decisions. The paper is very well-written. I do have a few minor suggestions/comments I hope the authors can address: 

1. The model is very similar to the options approach to capital investment decisions (Dixit and Pindyck, 1994). The authors should consider addressing the difference between their model and the options approach. 

2. SEV is treated as some form of charitable act in this paper. However, there is a potential for a company to do good and be profitable at the same time. Take carbon capturing as an example. It is unlikely that the technologies in the current stage will be a money-making venture. However, it is possible that the carbon recaptured can be turned into something valuable, or the company can simply sell the carbon credits. How would it affect the value frontier? 

Minor issue with the wording: 

The opening line starts with "The economic system. . ." Which economic system? The current economic system? The neoclassical economic system? Asian countries (China, Japan, and Korea) have a different set of corporate governance systems and social compacts compared to the US and Western European systems. 

Comments on the Quality of English Language

None

Author Response

Please see my response to reviewer 3

Reviewer 4 Report

Comments and Suggestions for Authors

In this manuscript, the authors propose an extension of the decision rule for determining company’s value by incorporating not only its financial worth but also considering its social and environmental value. The topic is interesting and worth investigating.

My remarks are as follows:

1. In “Abstract” and “Introduction” sections, the authors’ contributions and the novelty of their methodology for corporate value determination should be presented.

2. The manuscript's structure should be reorganized.

- In the current structure, a verification (“Results”) section is missing. Here, instead of so-called "anecdotal evidence," the authors should include analytical evidence or at least some numerical examples.

- Subsection “5.2. Extensions of the decision model” should be embedded into this new section.

- Appendix 1 should be incorporated into the manuscript's methodological section.

3. In “5. Discussion and Extensions” section, a comparison with results obtained from previous similar studies should be commented.

4, “Conclusion” section should be extended. Future research directions should be added.

Technical remarks:

The manuscript should be reformatted according to the journal’s instructions for authors – corresponding author’s notation, acknowledgement fragment, foot note citations, font: Palatino Linotype...

Author Response

Please see my comments to reviewer 4

Author Response File: Author Response.pdf

Round 2

Reviewer 4 Report

Comments and Suggestions for Authors

The quality of ijfs-2756977-v2 “Decision rules for corporate investment” has been improved substantially. 

In my opinion, the manuscript meets the requirements of International Journal of Financial Studies.

My recommendation is “Accept as is”.

Author Response

Thanks for the feedback to accept as is. We have made a change on the hypothesis as suggested by the editor.