A new study of over 3,000 Japanese firms reveals that companies often set overly ambitious earnings targets after previously missing their goals—an effort to restore investor confidence. This strategic move, known as “organizational impression management,” helps firms manage market perceptions despite the risk of repeated failure. The research also finds that institutional investors, analysts, and board diversity can temper this behavior, offering fresh insight into corporate communication and investor relations.

Abstract

Purpose – This study explores the contagion of greenwashing strategies among ESG mutual funds. It investigates how the greenwashing behaviors of peer funds within the same family influence a fund’s decision to engage in greenwashing. The research also examines the impact of greenwashing on genuine ESG funds and explores the mechanisms through which greenwashing strategies spread across ESG mutual funds.

Design/methodology/approach – This paper employs a two-stage least squares regression model with cross-fund returns standard deviation as an instrumental variable to disentangle the peer effects of greenwashing from family-level characteristics. The analysis incorporates various fund characteristics and introduces four contagion channels through which greenwashing may influence genuine ESG funds.

Findings – The study finds greenwashing behavior in ESG funds is positively influenced by similar practices within their fund family. Larger assets under management and older funds with higher management fees show resilience against greenwashing influences, while team-managed funds are more susceptible. Additionally, socially responsible investors struggle to distinguish between genuine and greenwashing ESG funds, which may contribute to the persistence of greenwashing practices.

Originality/value – This paper contributes to the literature by delineating the mechanisms of greenwashing contagion within ESG mutual funds. It also examines the demand-side incentives for adopting greenwashing strategies, offering insights into the implications for fund flows and investor behavior. This study is among the first to analyze the contagion effects of greenwashing strategies across an extensive network of ESG funds, enriching our understanding of the broader impacts of greenwashing in the context of socially responsible investing.

Age, education and even regional differences influence whether people pay off their balances or fall behind, new research reveals.

A new study in JAMA Network Open found that almost all Medicaid managed care plans (MCPs) cover at least one of the four formulations of naloxone. Eighty percent of Medicaid recipients, which include more than 70 million people, are enrolled in these plans. The study is the first to assess naloxone coverage within MCPs.