Detecting green-washing or substantial organizational communication: A model for testing two-way interaction between risk and sustainability reporting

Abstract

This paper contributes to the expanding landscape of methodological approaches and tools for investigating organizational sustainability communication. Our method allows for exploring two-way interactions between company risk and sustainability reporting. We present a basic but extendable method, while using only publicly available data. Our method adds additional features to established methods: It covers only risk (not returns), as theory mainly supports risk-reporting relationships and not return-reporting relationships. It tests for reverse causality of the risk-reporting relationship and links complementary explanations to didierent theoretical schools. Our method tests the model by employing data from a market with mandatory sustainability reporting to avoid self-selection bias.