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Greenwashing: Do Investors, Markets and Boards Really Care?

Author

Listed:
  • Erdin Akyildirim

    (University of Zurich)

  • Shaen Corbet

    (Dublin City University ; University of Waikato - Management School)

  • Steven Ongena

    (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR))

  • Les Oxley

    (University of Waikato)

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. The rise of social media amplifies potential reputational damage. National regulations influence market responses, with industries like energy and manufacturing facing more severe consequences due to increased scrutiny. Furthermore, nations with robust environmental values and consciousness witnessed greater market penalties, revealing the relationship between societal values, regulation, and sentiment.

Suggested Citation

  • Erdin Akyildirim & Shaen Corbet & Steven Ongena & Les Oxley, 2024. "Greenwashing: Do Investors, Markets and Boards Really Care?," Swiss Finance Institute Research Paper Series 24-82, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2482
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    Keywords

    Greenwashing; ESG; CSR; Regulation; reputational risk;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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