ABSTRACT
When companies try to be socially responsible, they are often met with skepticism. After all, the justification for the vast government regulatory apparatus is that profit-seeking firms simply are unwilling to do the right thing. The root cause of public skepticism is not just doubts about firms’ motives, but also that their claims are often difficult for outsiders to verify. Is the company that claims to have a “cleaner manufacturing process” really doing anything better for the environment? Many firms make these claims, whether about environmental or other areas of socially desirable behavior, and many people would be happy to recognize and even reward firms, should their claims be true.
