When Good Governance Isn’t Enough: Government Pressure as a Moderator of Greenwashing Behavior
Downloads
This study examines the effect of corporate governance on greenwashing and the moderating role of government pressure. Using panel data from 34 non-financial firms listed on the Indonesia Stock Exchange for 2017–2023, the results show that board gender diversity significantly reduces greenwashing, while board size and independence have no direct effect. Activist pressure strengthens the negative effect of board size on greenwashing, whereas government pressure enhances the impact of gender diversity and board independence. These findings indicate that effective governance combined with strong regulatory oversight can minimize symbolic sustainability disclosures. The study contributes to legitimacy theory by showing that governance effectiveness depends on external institutional forces. Practically, it suggests the importance of strengthening ESG regulations, third-party assurance, and substantive governance practices to promote corporate transparency and accountability.
Downloads
Aguilera, R. V., Aragon-Correa, J. A., Marano, V., & Tashman, P. A. (2021). The corporate governance of environmental sustainability: A review and proposal for more integrated research. Journal of Management, 47(6), 1486–1497. https://doi.org/https://doi.org/10.1177/0149206321991212
Baltagi, B. H. (2021). Econometric Analysis of Panel Data (6th ed.). Cham: Springer International Publishing.
Bansal, P., & Clelland, I. (2004). Talking trash: Legitimacy, impression management, and unsystematic risk in the context of the natural environment. Academy of Management Journal, 47(1), 93–103. https://doi.org/https://doi.org/10.5465/20159562
Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173. https://doi.org/https://psycnet.apa.org/doi/10.1037/0022-3514.51.6.1173
Bebchuk, L. A., & Weisbach, M. S. (2010). The State of Corporate Governance Research. The Review of Financial Studies, 23(3), 939–961. https://doi.org/https://doi.org/10.1093/rfs/hhp121
Benuzzi, M., Bax, K., Paterlini, S., & Taufer, E. (2023). Chasing ESG performance: How methodologies shape outcomes (SSRN Working Paper). https://doi.org/http://dx.doi.org/10.2139/ssrn.4662257
Berg, F., Fabisik, K., & Sautner, Z. (2021). Is history repeating itself? The (un)predictable past of ESG ratings (Finance Working Paper 708/2020). https://doi.org/http://dx.doi.org/10.2139/ssrn.3722087
Berg, F., Kölbel, J. F., & Rigobon, R. (2022). Aggregate confusion: The divergence of ESG ratings. Rev. Finance, 26(6), 1315–1344. https://doi.org/http://dx.doi.org/10.1093/rof/ rfac033
Bernini, F., Giuliani, M., & La Rosa, F. (2023). Measuring greenwashing: A systematic methodological literature review. Business Ethics, the Environment and Responsibility, November 2023, 649–667. https://doi.org/10.1111/beer.12631
Bhandari, A., Mammadov, B., Thevenot, M., & Vakilzadeh, H. (2022). Corporate Culture and Financial Reporting Quality. Accounting Horizons, 36(1), 1–24. https://doi.org/https://doi.org/10.2308/HORIZONS-19-003
Brown, W. O., Helland, E., & Smith, J. K. (2006). Corporate philanthropic practices. Journal of Corporate Finance, 12(5), 855–877. https://doi.org/. https://doi. org/10.1016/j.jcorpfin.2006.02.001
Chams, N., & García-Blandon, J. (2019). Sustainable or not sustainable? The role of the board of directors. Journal of Cleaner Production, 226, 1067–1081. https://doi.org/https://doi.org/10.1016/j.jclepro.2019.04.118
Chauhan, Y., & Kumar, S. B. (2018). Do investors value the non fi nancial disclosure in emerging markets ? Emerging Markets Review, 37(April), 32–46. https://doi.org/10.1016/j.ememar.2018.05.001
Chen, P., & Dagestani, A. A. (2023). Greenwashing behavior and firm value – From the perspective of board characteristics. Corporate Social Responsibility and Environmental Management, 30(5), 2330–2343. https://doi.org/https://doi.org/10.1002/csr.2488
Chen, Y. S., Huang, A. F., Wang, T. Y., & Chen, Y. R. (2020). Greenwash and green purchase behaviour: The mediation of green brand image and green brand loyalty. Total Quality Management & Business Excellence, 31(1–2), 194–209. https://doi.org/https://doi.org/10.1080/14783363.2018.1426450
Cho, C. H., Michelon, G., Patten, D. M., & Roberts, R. W. (2015). CSR disclosure: the more things change…? Accounting, Auditing & Accountability Journal, 28(1), 14–35. https://doi.org/https://doi.org/10.1108/AAAJ-12-2013-1549
Cohen, S., Kadach, I., Ormazabal, G., & Reichelstein, S. (2023). Executive Compensation Tied to ESG Performance: International Evidence. Journal of Accounting Research, 61(3). https://doi.org/10.1111/1475-679X.12481
Coles, J. L. (2008). Disclosure policy: A discussion of Leuz, Triantis and Wang (2008) on “going dark.” Journal of Accounting and Economics, 45(2–3), 209–220. https://doi.org/https://doi.org/10.1016/j.jacceco.2008.01.002
Datta, S., Doan, T., & Toscano, F. (2021). Top executive gender , board gender diversity , and financing decisions : Evidence from debt structure choice. Journal of Banking and Finance, 125, 106070. https://doi.org/10.1016/j.jbankfin.2021.106070
de Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B., & Soares, G. R. D. L. (2020). Concepts and forms of greenwashing: A systematic review. Environmental Sciences Europe, 32, 1–12. https://doi.org/https://doi.org/10.1186/s12302-020-0300-3
Deephouse, D. L. (1996). Does isomorphism legitimate? Academy of Management Journal, 39(4), 1024–1039. https://doi.org/https://doi.org/10.5465/256722
Delmas, M. A., & Burbano, V. C. (2011). The drivers of greenwashing. California Management Review, 54(1), 64–87. https://doi.org/https://doi.org/10.1525/cmr.2011.54.1.64
Dowling, J., & Pfeffer, J. (1975). Organizational Legitimacy: Social Values and Organizational Behavior between the Organizations seek to establish congruence. The Pacific Sociological Review, 18(1), 122–136.
Duarte, J. P., Bastos, S. A. P., d’Angelo, M. J., de Oliveira, E. S., & Fortunato, G. (2024). Oversight Mechanisms and the Reduction of Greenwashing. Revista de Gestao Social e Ambiental, 18(8), 1–22. https://doi.org/10.24857/rgsa.v18n8-065
Eccles, R. G., Krzus, M. P., Rogers, J. L., & Serafeim, G. (2021). ntegrated reporting and the future of accounting. Strategic Finance, 103(5), 36–443. https://doi.org/https://doi.org/10.1037/e715092011-001
Edmans, A., Gabaix, X., & Jenter, D. (2017). Executive compensa- tion: A survey of theory and evidence. In The handbook of the economics of corporate governance (pp. 383–539). Elsevier B.V. https://doi.org/https://doi.org/10.2139/ssrn.2992287
Eesley, C., & Lenox, M. J. (2006). Firm Responses to Secondary Stakeholder Action. Strategic Management Journal, 27(8), 765–781. https://doi.org/https:// doi. org/ 10. 1002/ smj. 536
Eliwa, Y., Aboud, A., & Saleh, A. (2023). Board gender diversity and ESG decoupling: Does religiosity matter? Business Strategy and the Environment, 32(7), 4046–4067. https://doi.org/10.1002/bse.3353
Elsheikh, T., Almaqtari, F. A., Mohammed, H., Hattami, A., Al, M. A., & Ettish, A. A. (2024). The moderating effect of women in boardrooms on the relationship between control of corruption and corporate sustainability performance. Discover Sustainability, 5, 502. https://doi.org/10.1007/s43621-024-00490-1
Enciso-Alfaro, S. Y., & García-Sánchez, I. M. (2022). Corporate governance and environmental sustainability: Addressing the dual theme from a bibliometric approach. Corporate Social Responsibility and Environmental Management, 30, 1025–1041. https://doi.org/https://doi.org/10.1002/csr.2403
Fama, E. F., & Jensen, M. . (1983). Separation of Ownership and Control. Journal of Law and Economics, 26, 301–325. https://doi.org/http://dx.doi.org/10.1086/467037
Farisyi, S. (2023). The role of corporate posture as moderation of relationships among the antecedents of sustainability reporting disclosure in Indonesia. Cogent Business and Management, 10(2). https://doi.org/10.1080/23311975.2023.2233259
Feng, T., Liu, S., & Zhang, Q. (2022). Linking perceived institutional force and environmental strategy: The moderating role of institutional incompleteness. Baltic Journal of Management, 17(3), 392–412. https://doi.org/https://doi.org/10.1108/BJM-06-2021-0221
Fich, E. M., & Shivdasani, A. (2012). Are busy boards effective monitors? In Corporate Governance (127th ed., pp. 221–258). Springer.
Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Cambridge University Press.
Freeman, R. E. (2007). Managing for stakeholders: Survival, reputation, and success. Yale University Press.
Galletta, S., Goodell, J. W., Mazzù, S., & Paltrinieri, A. (2023). Bank reputation and operational risk: The impact of ESG. Finance Research Letters, 51(103494). https://doi.org/http://dx.doi.org/10.1016/j.frl.2022.103494.
García-Meca, E., García-Sanchez, I.-M., & Martínez-Ferrero, J. (2015). Board diversity and its effects on bank performance: an international analysis. Journal of Banking and Finance, 53, 202–214. https://doi.org/https://doi.org/10.1016/j.jbankfin.2014.12.002
García-Sánchez, I. M., Hussain, N., Khan, S.-A., & Martínez-Ferrero, J. (2021). Do markets punish or reward corporate social responsibility decoupling? Business & Society, 60(6), 1431–1467. https://doi.org/https://doi.org/10. 1177/0007650319898839
Gatti, L., Pizzetti, M., & Seele, P. (2021). Green lies and their effect on intention to invest. Journal of Business Research, 127, 228–240. https://doi.org/https://doi.org/10.1016/j.jbusres.2021.01.028
Gatti, L., Seele, P., & Rademacher, L. (2019). Grey zone in – greenwash out. A review of greenwashing research and implications for the voluntary-mandatory transition of CSR. International Journal of Corporate Social Responsibility, 4(1), 1–15. https://doi.org/https://doi.org/10.1186/s40991-019-0044-9
Ghitti, M., Gianfrate, G., & Palma, L. (2024). The agency of greenwashing. In Journal of Management and Governance (Vol. 28, Issue 3). Springer US. https://doi.org/10.1007/s10997-023-09683-8
Ghozali, I. (2018). Aplikasi Analisis Multivariate Dengan Program IBM SPSS 25. Badan Penerbit Universitas Diponegoro.
Gull, A. A., Hussain, N., Khan, S. A., Khan, Z., & Saeed, A. (2023). Governing Corporate Social Responsibility Decoupling: The Effect of the Governance Committee on Corporate Social Responsibility Decoupling. Journal of Business Ethics, 185(2), 349–374. https://doi.org/10.1007/s10551-022-05181-3
Ha, M. T., Ngan, V. T. K., & Nguyen, P. N. (2022). Greenwash and green brand equity: The mediating role of green brand image, green satis- faction and green trust and the moderating role of information and knowledge. Business Ethics, the Environment & Responsibility, 31(4), 904–922. https://doi.org/https://doi.org/10.1371/journal.pone.0277421
Haque, F., & Jones, M. J. (2020). European firms’ corporate biodiversity disclosures and board gender diversity from 2002 to 2016. The British Accounting Review, 52(2), 100893. https://doi.org/https://doi.org/10.1016/j.bar.2020.100893
ICEL. (2021). Telaah Kebijakan Sustainable Consumption and Production (SCP) dalam Merespons Fenomena Greenwashing di Indonesia pada Era E-Commerce. https://icel.or.id/media/pdf/TelaahKebijakanSustainableConsumptionandProductionSCPdalamMeresponsFenomenaGreenwashingdiIndonesiapadaEraECommerce.pdf
Kahraman, A., & Kazançoğlu, İ. (2019). Understanding consumers’ purchase intentions toward natural-claimed products: A qualitative research in personal care products. Business Strategy and the Environment, 28(6), 1218–1233. https://doi.org/doi.org/10.1002/bse.2312
Khlifi, S., & Zouari, G. (2022). The moderating role of good corporate governance on the relationship between corporate social responsibility and real earnings management. Accounting and Management Information Systems, 21(4), 524–545. https://doi.org/http://dx.doi.org/10.24818/jamis.2022.04003
Kleffel, P., & Muck, M. (2023). Aggregate confusion or inner conflict? An experimental analysis of investors’ reaction to greenwashing. Finance Research Letters, 53(103421). https://doi.org/http://dx.doi.org/10.1016/j.frl.2022.103421.
Kumar, K., Kumari, R., Ponia, A., & Kumar, R. (2023). Factors Influencing Corporate Sustainability Disclosure Practices: Empirical Evidence From Indian National Stock Exchange. Journal of Financial Reporting And Reporting, 21(2), 300–321. https://doi.org/https://doi.org/10.1108/JFRA-01-2021-0023
Kuo, Y. K., Khan, T. I., Islam, S. U., Abdullah, F. Z., Pradana, M., & Kaewsaeng-On, R. (2022). Impact of green HRM practices on environmental performance: The mediating role of green innovation. Frontiers in Psychology, 13, 916723. https://doi.org/https://doi.org/10.3389/fpsyg.2022.916723
Li, Q., Shan, H., & Tang, Y. (2024). Corporate Climate Risk: Measurements and Responses. The Review of Financial Studies, 37(6), 1778–1830. https://doi.org/https://doi.org/10.1093/rfs/hhad094
Li, W., Li, W., Seppänen, V., & Koivumäki, T. (2022). Effects of greenwashing on financial performance: Moderation through local environmental regulation and media coverage. Business Strategy and the Environment, 32(1), 820–841. https://doi.org/https://doi.org/10.1002/bse.3177
Liu, Y., Miletkov, M.K., Wei, Z., Yang, T. (2015). Board independence and firm performance in China. Journal of Corporate Finance, 30, 223–244. https://doi.org/https://doi.org/10.1016/j.jcorpfin.2014.12.004
Liu, G., Qian, H., Shi, Y., Zhang, Y., & Wu, F. (2024). Does ESG report greenwashing increase stock price crash risk? China Journal of Accounting Studies, 1–25. https://doi.org/https://doi.org/10.1080/21697213.2024.2303070
Liu, X., Cifuentes-Faura, J., Zhao, S., & Wang, L. (2023). Government environmental attention and carbon emissions governance: firm-level evidence from China. Economic Analysis and Policy, 80, 121–142. https://doi.org/10.1016/j.eap.2023.07.016
Lopez-Arceiz, F. J., Bellostas, A. J., & Moneva, J. M. (2021). Accounting Standards for European Non-profits. Reasons and Barriers for a Harmonisation Process. Accounting in Europe, 18(1), 43–74. https://doi.org/https://doi.org/10.1080/17449480.2020.1795215
Lu, J., & Wang, J. (2021). Corporate governance, law, culture, environmental performance and CSR disclosure: A global perspective. Journal of International Financial Markets, Institutions and Money, 70, 101264. https://doi.org/10.1016/j.intfin.2020.101264
Lulu, C. L. (2021). Stakeholder Pressure and the Quality of Sustainability Report: Evidence From Indonesia. Journal of Accounting, Entrepreneurship and Financial Technology (Jaef), 2(1), 53–72. https://doi.org/10.37715/jaef.v2i1.1864
Ma, Y., & Ahmad, M. I. (2024). Do board characteristics impact greenwashing? Moderating role of CSR committee. Heliyon, 10(20), 38743. https://doi.org/http://dx.doi.org/10.1016/j.heliyon.2024.e38743
Majid, N. A., & Jaaffar, A. H. (2023). The Effect of Women ’ s Leadership on Carbon Disclosure by the Top 100 Global Energy Leaders. Sustainability, 15(11), 1–26. https://doi.org/https://doi.org/10.3390/su15118491
Marquis, C., Toffel, M. W., & Zhou, Y. (2016). Scrutiny, norms, and selective disclosure: A global study of greenwashing. Organization Science, 27(2), 483–504. https://doi.org/https://doi.org/10.1287/orsc.2015.1039
Naciti, V. (2019). Corporate governance and board of directors : The effect of a board composition on fi rm sustainability performance. Journal of Cleaner Production, 237, 117727. https://doi.org/10.1016/j.jclepro.2019.117727
OECD. (2015). Principles of Corporate Governance. OECD Publishing.
OECD. (2021). Beyond academic learning: First results from the survey of social and emotional skills. OECD Publishing. https://doi.org/https://doi.org/10.1787/92a11084-en
Radu, O. M., Dragomir, V. D., & Hao, N. (2023). Company-level factors of non-financial reporting quality under a mandatory regime: A systematic review of empirical evidence in the European Union. Sustainability, 15(23), 16265. https://doi.org/https://doi.org/10.3390/su152316265
Rausch, T. M., & Kopplin, C. S. (2021). Bridge the gap: Consumers’ purchase intention and behavior regarding sustainable clothing. Journal of Cleaner Production, 278(123882). https://doi.org/https://doi.org/10.1016/j.jclepro.2020.123882
Sebrina, N., Taqwa, S., Afriyenti, M., & Septiari, D. (2023). Analysis of sustainability reporting quality and corporate social responsibility on companies listed on the Indonesia stock exchange. Cogent Business and Management, 10(1). https://doi.org/10.1080/23311975.2022.2157975
Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. The Journal of Finance1, 52(2), 737–783. https://doi.org/https://doi.org/10.1111/j.1540-6261.1997.tb04820.x
Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 3(3), 571–610. https://doi.org/https://doi.org/10.5465/amr.1995.9508080331
Taglialatela, J., Miroshnychenko, I., Barontini, R., & Testa, F. (2024). Talk or walk? The board of directors and firm environmental strategies. Business Strategy and the Environment, 33(4), 2890–2910. https://doi.org/10.1002/bse.3628
Testa, F., Boiral, O., & Iraldo, F. (2018). Internalization of environmental practices and institutional complexity: Can stakeholders pressures encourage greenwashing? Journal of Business Ethics, 147, 287–307. https://doi.org/https://doi.org/10.1007/s10551-015-2960-2
Testa, F., Miroshnychenko, I., Barontini, R., & Frey, M. (2018). Does it pay to be a greenwasher or a brownwasher? Business Strategy and the Environment, 27(7), 1104–1116. https://doi.org/https://doi.org/10.1002/bse.2058
Torelli, R., Balluchi, F., & Furlotti, K. (2020). The materiality assessment and stakeholder engagement: A content analysis of sustainability reports. Corporate Social Responsibility and Environmental Management, 27(2), 470–484. https://doi.org/https://doi.org/10.1002/csr.1813
Trend Asia. (2021). Green Initiative Adaro Patut Dipertanyakan! Pers. https://trendasia.org/green-initiative-adaro-patut-dipertanyakan/
Walker, K., & Wan, F. (2012). The harm of symbolic actions and green-washing: Corporate actions and communications on environmental performance and their financial implications. Journal of Business Ethics, 109, 227–242. https://doi.org/https://doi.org/10.1007/s10551-011-1122-4
Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data. MIT press. https://doi.org/10.1007/978-3-319-60783-2_6
Wu, Z., Lin, S., Chen, T., Luo, C., & Xu, H. (2023). Does effective corporate governance mitigate the negative effect of ESG controversies on firm value? Economic Analysis and Policy, 80, 1772–1793. https://doi.org/https://doi.org/10.1016/j.eap.2023.11.018
Yu, E. P., Luu, B. V., & Chen, C. . (2020). Greenwashing in environmental, social and governance disclosures. Research in International Business and Finance, 52, 101192. https://doi.org/10.1016/j.ribaf.2020.101192
Zahid, R. M. A., Maqsood, U. S., Irshad, S., & Khan, M. K. (2023). The role of women on board in combatting greenwashing: A new perspective on environmental performance. Business Ethics, the Environment and Responsibility, 34(February), 121–137. https://doi.org/10.1111/beer.12607
Zhang, D. (2022). Are firms motivated to greenwash by financial con- straints? Evidence from global firms’ data. Journal of International Financial Management & Accounting, 33(3), 459–479. https://doi.org/https://doi.org/10.1111/jifm.12153
Zhang, X., Kong, L., & Hu, X. (2024). Shades of green: The impact of greenwashing on stock price crash risk. Finance Research Letters2, 70, 106285. https://doi.org/https://doi.org/10.1016/j.frl.2024.106285
Zhou, G., Liu, L., & Luo, S. (2022). Sustainable development, ESG performance and company market value: Mediating effect of financial performance. Business Strategy and the Environment, 31(7), 3371–3387. https://doi.org/https://doi.org/10.1002/bse.3089
Copyright (c) 2026 Andy Iranda, Etna Nur Afri Yuyetta
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Terjemahan.png)
