Why We鈥檙e All Impact Investors Now
To some, socially responsible investing used to be about avoiding certain companies. Increasingly, it鈥檚 about using market tools to make a difference.
Why We鈥檙e All Impact Investors NowPaper Contracts with Benefits: The Implementation of Impact Investing
We draw on new data and theory to examine how private market contracts adapt to serve multiple goals, particularly the social-benefit goals that impact funds add to their financial goals. Counter to the intuition from multitasking models (Holmstrom and Milgrom, 1991), few impact funds tie compensation directly to impact, and most retain traditional financial incentives. However, funds contract directly on impact in other ways and adjust aspects of the contracts like governance. In the cross-section of impact funds, those with higher profit goals contract more tightly around both goals.
- Authored by
- 2018
- Impact Investing
Read the Research in Chicago Booth Review