The agency of greenwashing

Ghitti, Marco; Gianfrate, Gianfranco; Palma, Lorenza

doi:10.1007/s10997-023-09683-8

Cited by 12 publications

(2 citation statements)

References 96 publications

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“…This heightened risk perception among lenders and investors can lead to an increase in the cost of debt for these firms, as the market demands higher returns for perceived higher risks. Therefore, H2 posits that the interplay between a firm's ESG performance and the complexity of alternative finance will influence its debt financing costs, consistent with the implications of Agency Theory (Ghitti et al, 2023).…”

Section: Hypothesis Developmentmentioning

confidence: 63%

Alternative finance in bank-firm relationship: how does board structure affect the cost of debt?

Palmieri,

Geretto,

Polato

et al. 2024

J Manag Gov

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In this paper, we examine the relationship between alternative finance and board structure on the cost of debt for firms, focusing on the unique effects of differing board characteristics. Using a dataset of 176 European listed companies observed annually from 2013 to 2022, we dissect this relationship through several hypotheses considering factors such as the supply of alternative finance, board gender composition, age, expertise, and board turnover. Our findings reveal that increased alternative finance credit supply escalates the cost of debt, especially for firms with lower ESG scores. Firms with young boards, boards specialized in economics or low, and board turnover also experience a rise in borrowing costs with increasing of alternative finance. Through a pooling 2SLS model, we provide robust evidence about the interplay of alternative finance and varying board structures on the cost of debt. This research clarifies the intricacies of bank-firm relationships in alternative finance and holds significant implications for supervisory authorities, banks, and policymakers. It underscores the necessity of good corporate governance in managing the cost implications of alternative finance. It calls for tailored risk assessment strategies, conducive regulatory frameworks, and vigilant supervisory approaches to create a resilient financial ecosystem where alternative finance can thrive without inordinately inflating the cost of debt.

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Section: Hypothesis Developmentmentioning

confidence: 63%

Alternative finance in bank-firm relationship: how does board structure affect the cost of debt?

Palmieri,

Geretto,

Polato

et al. 2024

J Manag Gov

View full text Add to dashboard Cite

show abstract

“…Greenwashing companies may engage in deceptive tactics to create an appearance of being more environmentally and socially responsible than they genuinely are (as defined by the Swiss Financial Market Authority (FINMA) in Guidance 05/2021). While many businesses genuinely embrace ESG principles, greenwashing can undermine the credibility of the broader movement and reduce firm value (Ghitti, Gianfrate, & Palma, 2023). A significant challenge is the potential decline in confidence in genuinely eco-friendly products, as greenwashing fosters skepticism and hesitancy among consumers (Aji & Sutikno, 2015).…”

Section: Empirical Discussion On Corporate Priorities and Greenwashingmentioning

confidence: 99%

Rethinking Corporate Priorities: The Surge of Esg Investing and Greenwashing Risks

Aik

2024

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ESG investing, centered on a company's environmental, social, and governance practices, has surged in popularity as businesses recognize the imperative of catering to a wider array of stakeholders beyond shareholders. Investors have transitioned from a profit-centric ethos to one that prioritizes broader societal impact. Evaluation criteria now encompass a company's commitment to ESG principles and responsible business conduct. This transformative investor perspective encourages companies to openly embrace ESG integration, particularly emphasizing environmental considerations. Nevertheless, the specter of greenwashing, where companies engage in deceptive practices to feign environmental responsibility, persists as a contentious issue in the ongoing dialogue surrounding ESG investing.

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Environmental policy and stakeholder engagement: Incident‐based, cross‐country analysis of firm‐level greenwashing practices

Keresztúri,

Berlinger,

Lublóy

2024

Corp Soc Responsibility Env

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In this study, we investigate how internal and external monitoring systems can help combat greenwashing. We propose a novel, incident‐based measure to investigate the greenwashing behavior of 1218 large and mid‐cap companies across different industries between 2008 and 2020. These companies are constituents of the MSCI World Index, covering 23 developed market economies. We consider a company to be engaged in greenwashing if it improves its environmental ESG subscore while simultaneously being responsible for severe environmental damage. According to our greenwashing indicator, about 7% of the companies were involved in greenwashing at least once during the 13‐year sample period. The proportion of greenwashing companies is highest in the energy, utilities, and materials industries. We find evidence that both internal and external monitoring mechanisms can be effective in deterring companies from adopting greenwashing strategies. Firms with more independent board members, attracting more attention from the investors, and headquartered in countries where the population is more environmentally aware are significantly less likely to engage in greenwashing. The awareness of the population is a key factor especially in the energy, utility, and material sectors.

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The agency of greenwashing

Cited by 12 publications

References 96 publications

Alternative finance in bank-firm relationship: how does board structure affect the cost of debt?

Alternative finance in bank-firm relationship: how does board structure affect the cost of debt?

Rethinking Corporate Priorities: The Surge of Esg Investing and Greenwashing Risks

Environmental policy and stakeholder engagement: Incident‐based, cross‐country analysis of firm‐level greenwashing practices

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