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Title: Surfing the green wave Authors:  Carmelo Latino - Leibniz Institute for Financial Research SAFE; Ca Foscari University of Venice (Germany) [presenting]
Abstract: A quasi-natural experiment is exploited to study the impact of greenwashing on stock prices. More specifically, we investigate a new channel whereby adopting a new green name (i.e. a name that evokes green and sustainability feelings) could influence investor behavior even in the case of companies that are not related to green activities. Results show that greenwashing has a short-term significant positive impact on companies' value. Cumulative abnormal returns for non-green companies are three times higher than cumulative abnormal returns of green firms over a 10-days window around the announcement date of the name change. However, this effect is transitory and vanishes as soon as investors realize the inconsistency of the name change. In the long term, greenwashing harms companies' value. Results suggest the presence of a green mania in the market with investors eager to buy anything green and some companies keen to surf the green wave.