Scrutiny, Norms, and Selective Disclosure: A Global Study of Greenwashing
AbstractUnder increased pressure to report environmental impacts, some firms selectively disclose relatively benign impacts, creating an impression of transparency while masking their true performance. What deters selective disclosure and leads firms to instead make disclosures more representative of their environmental performance? We identify key company- and country-level factors that, by intensifying scrutiny on firms and diffusing global norms to their headquarters countries, limit firms' use of selective disclosure. We test our hypotheses using a novel panel dataset of 4,750 public companies across many industries and headquartered in 45 countries during 2004-2007, when the practice of environmental disclosure increased among many global corporations. Our results show that firms that are more environmentally damaging, particularly those in countries where they are more exposed to scrutiny and global norms, are less likely to engage in selective disclosure. We contribute to institutional theory by identifying selective disclosure as a corporate symbolic strategy and by revealing how scrutiny and norms limit this symbolic behavior.
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Bibliographic InfoPaper provided by Harvard Business School in its series Harvard Business School Working Papers with number 11-115.
Length: 51 pages
Date of creation: May 2011
Date of revision: Dec 2013
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