 When is greenwashing an easy fix?Richard Paul Gregory Journal of Sustainable Finance & Investment, 2023, vol. 13, issue 2, 919-942 Abstract: Greenwashing has long been considered a viable strategy in the literature and academic research has explored its drivers from an institutional viewpoint. This paper extends the literature by considering greenwashing from a financial management viewpoint. It is found that when firm stock volatility is low, when the weighted average cost of capital is high, when firm pricing power is strong, and when information asymmetry is high, that the financial incentives for greenwashing are strong. The potential returns to greenwashing are weakly related to the level of systemic risk of the firm. The simulation results of the model indicate that in the current era that the returns to greenwashing are quite limited without a lot of information asymmetry. The results indicate that in previous eras, there were more opportunities for greenwashing. Overall, the results suggest that for low-and average-beta firms that organizational-level drivers and individual-level psychological drivers are more important in driving greenwashing decisions. The results also show why stock-based incentives do not support corporate social responsibility. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:jsustf:v:13:y:2023:i:2:p:919-942 Ordering information: This journal article can be ordered from DOI: 10.1080/20430795.2021.1907091 Access Statistics for this article Journal of Sustainable Finance & Investment is currently edited by Dr Matthew Haigh More articles in Journal of Sustainable Finance & Investment from Taylor & Francis Journals |
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