ESG Incentives and Attracting Socially Responsible Capital

Meg Adachi-Sato
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Meg Adachi-Sato: Research Institute for Economics & Business Administration, Kobe University, JAPAN and Faculty of Business Administration and Accountancy, Khon Kaen University, THAILAND

No DP2023-03, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This study examines how for-profit firms finance capital from investors through environmental, social, and governance (ESG) effort. It examines a situation with two types of investors: socially responsible and for-profit investors. In this scenario, firms outnumber all investors in the market and they must attract socially responsible investors to successfully obtain the capital they require. Regardless of whether socially responsible investors' search has significant effects, this study demonstrates that when a firm is willing to take ESG actions, regulators aiming to promote ESG may encourage investors to prioritize ESG performance in their investment choices; meanwhile, strengthening shareholders' rights or promoting corporate governance reform may not necessarily be ideal for them.

Keywords: ESG; Matching intensity; Search; Social impact; Socially responsible investor (search for similar items in EconPapers)
JEL-codes: D83 G23 G32 M14 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2023-02, Revised 2023-08
New Economics Papers: this item is included in nep-cfn, nep-env, nep-mfd and nep-sea
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