EconPapers    
Economics at your fingertips  
 

Socially Responsible Investment: Ex-ante Contracting or Ex-post Bargaining?

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

No DP2021-20, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This paper shows how a socially and environmentally aware firm principal can motivate a profit-oriented manager to pursue environmental, social and governance (ESG) outcomes. In the model, the manager produces a verifiable output that is detrimental to ESG, but also engages in an unverifiable output that promotes ESG. I show that an ex-post bargaining contract is preferred to an ex-ante commitment contract if the unverifiable output substantially improves ESG or if there is a large negative externality. The paper also demonstrates how social impact bonds can be more effective than short-term debt to finance social programs.

Keywords: Socially responsible investment; ESG; Multitask; Hold-up; Incomplete contracts; Social impact bonds; Sustainability-linked bonds (search for similar items in EconPapers)
JEL-codes: D86 G11 G23 M12 M14 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2021-09, Revised 2022-05
New Economics Papers: this item is included in nep-cta, nep-env, nep-gth and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2021-20.pdf Revised version, 2022 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kob:dpaper:dp2021-20

Access Statistics for this paper

More papers in Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University 2-1 Rokkodai, Nada, Kobe 657-8501 JAPAN. Contact information at EDIRC.
Bibliographic data for series maintained by Office of Promoting Research Collaboration, Research Institute for Economics & Business Administration, Kobe University ().

 
Page updated 2023-02-04
Handle: RePEc:kob:dpaper:dp2021-20