RIEB Discussion Paper Series No.2023-03

RIEB Discussion Paper Series No.2023-03


ESG Incentives and Attracting Socially Responsible Capital


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.


ESG; Matching intensity; Search; Social impact; Socially responsible investor

JEL Classification

D83, G23, G32, M14


Junior Research Fellow, Research Institute for Economics & Business Administration, Kobe University
Faculty of Business Administration and Accountancy, Khon Kaen University
E-mail: megasato@diamond.kobe-u.ac.jp.