CSR disclosure and investor social preferences: heterogenous investor responses to media reports on corporate greenwashing
Journal of Accounting & Organizational Change
ISSN: 1832-5912
Article publication date: 26 January 2024
Abstract
Purpose
There is emerging evidence in the accounting literature that investors react negatively to corporate greenwashing. But does that hold for all investors, or do different types of investors react differently? This paper aims to study retail investors’ responses to media reports on corporate greenwashing and how these responses depend upon the investors’ social value orientation. The authors argue that media reporting on corporate greenwashing negatively affects the rationale for allocating funds to firms engaging in greenwashing. The authors also expect this reaction to be stronger for prosocial investors compared to proself investors.
Design/methodology/approach
The authors conduct an online experiment with 229 participants representing retail investors in the German-speaking countries.
Findings
The results show that retail investors who received media reports on deceptive disclosure invest more funds in the company that does not engage in greenwashing (and less in the firm that engages in greenwashing) than investors who did not receive these reports. The authors’ results provide novel evidence that this effect primarily holds for investors with a prosocial value orientation. Finally, the authors’ data show that lower trust in the firm that engages in greenwashing partially mediates the effect of media reports on investor choices.
Originality/value
The authors provide unique evidence how different types of investors react to media reports on greenwashing. The authors find that moral motives, rather than risk-return considerations, drive investor responses to greenwashing. Overall, these findings support the important function of the media as an intermediary in stock market participation and highlight the pivotal role of individual traits in investors’ responses to greenwashing.
Keywords
Acknowledgements
The authors would like to thank Jörn Basel, Bernhard Hirsch, Stefan Linder, Michael Koetter and seminar participants at the 2023 conference of the European Accounting Association for their helpful feedback.
Compliance with ethical standards: The authors declare that they have no conflict of interest. The authors obtained informed consent before the participant took part in the experiment. The authors also obtained approval from the corresponding author’s IRB to conduct the study involving human participants.
Data are available from the corresponding author upon request.
Citation
Schwertner, T. and Sohn, M. (2024), "CSR disclosure and investor social preferences: heterogenous investor responses to media reports on corporate greenwashing", Journal of Accounting & Organizational Change, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JAOC-01-2023-0012
Publisher
:Emerald Publishing Limited
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