The green fog: Environmental rating disagreement and corporate greenwashing

Xinwen Hu, Renhai Hua, Qingfu Liu and Chuanjie Wang

Pacific-Basin Finance Journal, 2023, vol. 78, issue C

Abstract: We investigate whether the environmental rating disagreement (ERD) would influence future corporate greenwashing behavior. We find that ERD would increase the future probability of corporate greenwashing, mainly through mechanisms of agency costs and corporate information opacity. The relationship between ERD and corporate greenwashing is stronger in heavily-polluted firms, and would be significantly affected by internal incentives. In the presence of ERD, corporate greenwashing of firms with higher internal supervision intensity and external investor attention exhibits a smaller or even insignificant increase. Overall, our findings indicate that greenwashing could be curbed through the unification of environmental rating standards, the improvement of internal supervision improvement, and the expansion of external monitoring.

Keywords: Environmental rating disagreement; Corporate greenwashing; Agency costs; Firm opacity (search for similar items in EconPapers)
JEL-codes: D22 G24 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:78:y:2023:i:c:s0927538x23000185

DOI: 10.1016/j.pacfin.2023.101952

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