XF-HKIF3PX-2 Exit versus Voice
Abstract
We study the relative effectiveness of exit (divestment and boycott) and voice (engagement) strategies in a world where companies generate externalities and some agents care about the social impact of their decisions. We show that if the majority of investors are even slightly socially responsible, voice achieves the socially optimal outcome. In contrast, exit does not unless everybody is significantly socially responsible. If the majority of investors are purely selfish, exit is a more effective strategy, but neither strategy generally achieves the first best. We also show that exit can sometimes reduce social welfare.
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Cites (7)
Works cited in this paper's bibliography that are themselves in the XFID registry.
- A Theory of Socially Responsible Investment (2022) Abstract
- Socially Responsible Finance: How to Optimize Impact? (2021) Abstract
- The Impact of Impact Investing (2021) Abstract
- Aggregate confusion: the divergence of ESG ratings (2020) Abstract
- Grow the Pie: How Great Companies Deliver Both Purpose and Profit (2020) Abstract
- Impact investing (2017) Abstract
- The Effect of Green Investment on Corporate Behaviour (2001) Abstract
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University of Chicago Press (2022). Exit versus Voice. XFID: XF-HKIF3PX-2. Retrieved from https://xframework.id/XFHKIF3PX2
XF-HKIF3PX-2