Does religiosity influence corporate greenwashing behavior?

Abstract

We analyze the influence of religious social norms on corporate greenwashing behavior. Specifically, we focus on a specific form of greenwashing: selective disclosure. Using a large sample of US firms between 2005 and 2019, we show that firms located in counties where religious adherence is high are less likely to engage in greenwashing. We also find that a stronger religious adherence within the county in which a company is located reduces the magnitude of greenwashing, when observed. We further analyze the mechanism underlying this relationship and show that religious adherence impacts greenwashing behaviors through the channel of risk aversion. A comprehensive set of robustness tests aimed at addressing potential endogeneity concerns confirms that religion is a relevant driver of corporate greenwashing behavior.