Greenwashing: Do Investors, Markets and Boards Really Care?

Erdinc Akyildirim, Shaen Corbet, Steven Ongena and Les Oxley
Additional contact information
Erdinc Akyildirim: Bogazici University and University of Zurich
Les Oxley: University of Waikato

No 23-90, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: What are the financial repercussions of corporate greenwashing? To answer this question, we focus on the impact of such ethically flawed practices on corporate stock market performance. We find a broad devaluation, with an average abnormal stock return of -0.63%, indicating investor disapproval of deceptive environmental claims. We further find a shift in investor sentiment in parallel with the growth of social media, underscoring the potential for future swift and extensive reputational damage. National regulatory power is also identified as a determinant of market response intensity. Industries inherently associated with environmental concerns, particularly energy and manufacturing, experienced more pronounced market reactions, pointing to heightened stakeholder scrutiny. Furthermore, nations with robust environmental values and consciousness witnessed intensified market penalties for greenwashing, revealing the interplay of societal values, national rules and investor sentiment.

Keywords: Greenwashing; ESG; CSR; Regulation; Reputational Risk (search for similar items in EconPapers)
JEL-codes: G01 G14 G38 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2023-10
New Economics Papers: this item is included in nep-ene
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Greenwashing: Do Investors, Markets and Boards Really Care? (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2390

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