consumers' beliefs about the credibility of firms' CSR claims, which depend in turn on the (expected) fines for fraud. First, we … likelihood of certification. Second, fraud only arises when the fines for fraud are at intermediate levels and some CSR firms do … not certify their practices. Third, the presence of fraud comes at a cost for firms by inducing lower equilibrium prices …

is well known. How- ever, informational asymmetries create the need for adequate instruments to prevent fraud. This paper …, monitoring may be the best instrument for preventing fraud. When income-generating ability is the only unobservable variable …