IDEAS home Printed from https://ideas.repec.org/a/spr/jecfin/v49y2025i3d10.1007_s12197-025-09725-x.html
   My bibliography  Save this article

The role of greenwashing scandals on investors’ herding behavior

Author

Listed:
  • Amin Shakourloo

    (Cyprus International University)

  • Asil Azimli

    (Cyprus International University)

Abstract

This study investigates the impact of ten major greenwashing scandals between 2000 and 2023 on investor herding behavior. By the combination of Bayesian game theory with econometric models within an event study framework, we distinguished between "productivity booms," characterized by enhanced transparency and accurate information, and "sentiment booms," where manipulated sentiment leads to capital misallocation. Research findings indicates greenwashing scandals intensify investor herding under high volatility and low transparency. Considerably, a notable decrease in stock returns and an increase in trading volumes were observed following these scandals. The findings emphasize the need for sector-specific ESG enforcement, investor education on greenwashing risks, and real-time sustainability data mechanisms to strengthen informed decision-making and safeguard market stability.

Suggested Citation

  • Amin Shakourloo & Asil Azimli, 2025. "The role of greenwashing scandals on investors’ herding behavior," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 49(3), pages 733-767, September.
    • Handle: RePEc:spr:jecfin:v:49:y:2025:i:3:d:10.1007_s12197-025-09725-x
    DOI: 10.1007/s12197-025-09725-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s12197-025-09725-x
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s12197-025-09725-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jecfin:v:49:y:2025:i:3:d:10.1007_s12197-025-09725-x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.