Corporate governance stakeholder scrutiny and greenwashing

Ong, Min Hao (2025) Corporate governance stakeholder scrutiny and greenwashing. Final Year Project, UTAR.

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Abstract

This study examines how board independence, board diversity and board size relate to greenwashing, and whether stakeholder scrutiny strengthens these governance effects. Using panel data for 247 large, non-financial listed firms across Malaysia, Singapore, Indonesia, Thailand, the Philippines and China from 2014–2023, we employ two-way fixed-effects models with firm-clustered standard errors. Greenwashing is measured as a peer-relative decoupling score, defined as standardized ESG disclosure from Bloomberg minus standardized ESG performance from LSEG. Stakeholder scrutiny is captured by a composite external governance index, constructed via an unweighted additive count index on firm size, international sales, MSCI inclusion, cyclical consumer-sector status and controversial-industry classification, and a majority vote rule is used as a robustness measure. Correlated random-effects (Mundlak) models are further estimated to separate within- and between-firm effects, with controls for leverage, profitability, firm size and liquidity. By integrating agency, stakeholder, legitimacy and signaling perspectives, the study addresses whether external scrutiny moderates the board greenwashing link and clarifies when boards are more effective in deterring symbolic ESG disclosure and supporting decision-useful ESG reporting in heterogeneous Asian markets

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