Final answer:
The statement about companies with good ESG practices having higher stock prices and lower cost of capital is true. Good ESG practices can lead to a higher stock valuation and lower risk perception, thus reducing the cost of capital.
Step-by-step explanation:
The statement that a study by Harvard Business School found that companies with good ESG (Environmental, Social, and Governance) practices had higher stock prices and lower cost of capital can be considered true. When companies invest in ESG practices, they tend to attract socially conscious investors and may benefit from enhanced brand loyalty and reputation, which can translate to a more stable and potentially higher stock valuation. Moreover, investors often perceive companies with robust ESG practices as lower risk, which can lead to a lower cost of capital due to a reduced risk premium.
Regarding the question about positive externalities of company investments in research and development (R&D), such investments often lead to innovation, which can benefit not just the company, but society as a whole. Innovations can result in new products or more efficient processes, likely leading to broader economic growth, which is a positive externality. Improvements in technology and knowledge disseminated from R&D can also spur advancements in various sectors and industries beyond the company's scope.