Greenwash: Corporate Environmental Disclosure Under Threat of Audit

@article{Lyon2011GreenwashCE,
  title={Greenwash: Corporate Environmental Disclosure Under Threat of Audit},
  author={T. Lyon and J. Maxwell},
  journal={IO: Empirical Studies of Firms & Markets eJournal},
  year={2011}
}
  • T. Lyon, J. Maxwell
  • Published 2011
  • Business
  • IO: Empirical Studies of Firms & Markets eJournal
  • We develop an economic model of “greenwash,” in which a firm strategically discloses environmental information and a non-governmental organization (NGO) may audit and penalize the firm for failing to fully disclose its environmental impacts. We identify conditions under which NGO punishment of greenwash backfires, inducing the firm to become less rather than more forthcoming about its environmental performance. We show that complementarities with NGO auditing may justify public policies… CONTINUE READING
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