N°24-82: Greenwashing: Do Investors, Markets and Boards Really Care?

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.