Does ESG Crowd Out Support For Government Regulation?

94 Pages Posted: 29 Jul 2023 Last revised: 2 Aug 2023

See all articles by Hajin Kim

Hajin Kim

The University of Chicago Law School

Joshua Macey

Yale Law School

Kristen Underhill

Columbia University - Law School

Date Written: July 26, 2023

Abstract

Do voluntary corporate prosocial efforts reduce or amplify support for government regulation? We build a theory of opposing mechanisms. Voluntary efforts could make it seem like the problem is being fixed (“Coca-Cola is already tackling plastic waste!”) and thus that regulation is unnecessary. Or they could make the problem seem more important (“even Walmart is addressing this”) or regulation more feasible (“regulation will not impose excessive costs on industry”). Because these factors move in opposing directions, we posit that any crowding-in or crowding-out effects will be small and context-dependent. To test our theory, we ran two preregistered, randomized controlled studies with over 2800 participants, drawing from the real-world materials firms used to advertise their voluntary efforts. We find no economically significant effects from the voluntary efforts on popular support for government regulation, and we find evidence consistent with our theory that competing mechanisms are at play.

Keywords: Corporate law, corporate governance, ESG, corporate social responsibility

Suggested Citation

Kim, Hajin and Macey, Joshua and Underhill, Kristen, Does ESG Crowd Out Support For Government Regulation? (July 26, 2023). University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 983, Available at SSRN: https://ssrn.com/abstract=4521781 or http://dx.doi.org/10.2139/ssrn.4521781

Hajin Kim (Contact Author)

The University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

Joshua Macey

Yale Law School ( email )

127 Wall Street
New Haven, CT 06510
United States

HOME PAGE: http://https://law.yale.edu/joshua-macey

Kristen Underhill

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10027

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