Study links distrust of companies to lower stock investing

A 2025 study by Arizona State University researchers Leonardo Barcellos and Scott Emett found that many Americans believe corporate wrongdoing is more common than outside estimates suggest. For everyday investors, the point is practical: if distrust keeps people out of stocks, it can affect how much wealth they build over time.

Barcellos and Emett recruited American retail investors and asked about their views of businesses, corporate executives and personal saving behavior, according to the study. Retail investors are individuals investing their own money, often through brokerage accounts, retirement plans or apps, rather than institutions managing money for clients.

One survey in the research included 1,200 Americans. Participants were asked how often they thought businesses engaged in behavior described by the researchers as fraudulent or exploitative, but not criminal, in pursuit of higher profits. The researchers then compared those perceptions with estimates drawn from a range of studies on the actual prevalence of such conduct.

The study found a wide gap between belief and estimated reality. Americans in the survey thought questionable corporate behavior was more widespread than the benchmark estimates indicated, according to Barcellos and Emett.

Why perception can change investing behavior

The link to investing is straightforward. Stocks represent ownership claims on companies. If someone believes companies are broadly dishonest or exploitative, that person may be less willing to own shares, even through diversified funds that hold many businesses at once.

Barcellos and Emett found that people with more cynical views of corporate misconduct were less likely to invest in the stock market. The research connects those attitudes to savings behavior, suggesting that negative beliefs about businesses can spill over into decisions about whether to participate in equities.

That matters for retirement planning because stock market exposure is one common way households seek long-term growth. Compounding, the process where gains can generate additional gains over time, works more strongly when money remains invested for long periods. Lower participation in stocks can therefore reduce the chance that savers benefit from that growth, though actual outcomes depend on timing, asset mix, fees and personal circumstances.

The study does not argue that corporate misconduct is imaginary. It says severe cases exist, and those cases can shape public views. The researchers’ point is that the most visible examples may cause people to overestimate how common bad behavior is across the broader business world.

For investors, the takeaway is less about trusting any single company and more about understanding how beliefs influence financial choices. Barcellos and Emett’s findings suggest that media-driven or experience-driven cynicism can have second-order effects: people who distrust companies more may avoid the very market where many retirement accounts are invested.

The research was cited with data attribution to Barcellos and Emett and Panmure Liberum.

This story draws on original reporting from Klement on Investing.