When do firms greenwash?

corporate visibility, civil society scrutiny, and environmental disclosure

Edición de la obra When do firms greenwash?

Under increased pressure to report environmental impacts, some firms selectively disclose relatively benign impacts, creating an impression of transparency while masking their true performance; other firms' disclosures, in contrast, are more representative of their environmental performance. What deters selective disclosure? We hypothesize that selective disclosure, a novel symbolic strategy firms use to manage stakeholder perceptions, is mitigated by two forms of organizational visibility. Firms with greater domain-specific visibility are especially vulnerable to stakeholder criticism and therefore less prone to selective disclosure. In contrast, more generically visible firms are less prone to selective disclosure only when subjected to civil society scrutiny that activates these firms' latent vulnerability. We test our hypotheses using a novel panel dataset of 4,484 public companies in many industries, headquartered in 38 countries, during 2005-2008, when environmental disclosure increased among global corporations. We find that domain-specific visibility mitigates selective disclosure, that it mitigates selective disclosure more so than generic visibility, and that generic visibility mitigates selective disclosure only in the presence of civil society scrutiny. This research contributes to understanding how corporations manage the symbolic use of information and how corporate behavior is influenced by civil society scrutiny embedded in institutional processes.