Investors’ Perceptions of Potentially Fraudulent Environmental, Social, and Governance Disclosures

Abstract

Investor’s Perceptions regarding Fraudulent Environment, Social, and Governance (ESG) Disclosures digs heavily into how important the validity of ESG disclosures are to potential and current investors of a well preforming company. The utilization of per- and polyfluoroalkyl substances (PFAS) is growing, without any regard to the dangerous side effects that these substances have to the environment and humans. A survey was conducted to ask students their likelihood of investing in a fictious company, who according to Morningstar has a rosy outlook, given their history of fraudulent ESG disclosures and current use of PFAS. To test this, there are two manipulations: the location of the illegal dumping of PFAS; in-state or out of the country, and the credibility of the whistleblower; internal or external. Each student was randomly given one of four versions of the survey that altered the manipulations, then answered manipulation check questions to ensure they thoroughly read the information. It was hypothesized that investors would be least likely to invest when the illegal dumping occurred in-state and the whistleblower was an internal source and most likely to invest when the illegal dumping occurred out of the country and the whistleblower was an external source. Data collection has been conducted and data analysis is currently underway. Once the data is analyzed, it will be determined which manipulation, location of the illegal dumping or credibility of the whistleblower, is the dominant factor over the other.