Scrutiny, Norms, and Selective Disclosure: A Global Study of Greenwashing
Michael W. Toffel
Harvard Business School (HBS) - Technology & Operations Management Unit
December 7, 2013
Harvard Business School Organizational Behavior Unit Working Paper No. 11-115
Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 11-115
Under 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.
Number of Pages in PDF File: 51working papers series
Date posted: May 10, 2011 ; Last revised: December 9, 2013
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