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Companies regularly have to address opposing interests from their shareholding and non-shareholding stakeholder groups. Consequently, a wealth of previous research has focused on how CEOs decide which stakeholder management activities to pursue and prioritize. In contrast, however, surprisingly little research has considered how (potential) investors react to a company’s management of shareholding and non-shareholding stakeholders and what factors drive their reactions in such contexts. We seek to fill this gap in the literature by conducting an experimental scenario study (N = 997) in which investment behavior is analyzed in situations in which management has to make a trade-off between shareholders’ and non-shareholding stakeholders’ interests. Our results show that (potential) investors consider the assumed costs of fulfilling non-shareholding stakeholders’ interests and the perceived sustainability of doing so for corporate success when making investment decisions in such contexts. In cases of low costs or high sustainability, participants were more willing to invest in a company that favored non-shareholding over shareholding stakeholders (thereby deciding against their immediate financial interests), while the opposite was true in cases of high costs or low sustainability. With these results, our paper broadens stakeholder theory’s focus by taking individual investors’ reactions to corporate stakeholder management into account. Moreover, it both provides evidence for and extends the “Enlightened Stakeholder Theory”, which proposes that organizations should fulfill stakeholders’ interests if doing so contributes to long-term firm value enhancement, but has so far not considered the role of the costs necessary for fulfilling stakeholders’ claims in such decisions.

Investors’ reactions to companies’ stakeholder management: the crucial role of assumed costs and perceived sustainability