Narcissistic greenwashing: a cross-country evidence on the divergent paths to stock price crash risk

Abstract

Purpose The purpose of this paper is to investigate the impact of greenwashing on stock price crash risk (SPCR) and to examine the context-dependent moderating effects of CEO narcissism and ownership structure across two distinct institutional settings, Indonesia and Singapore. Design/methodology/approach This study uses a composite environmental, social, and governance (ESG) score data set from London Stock Exchange Group and Bloomberg for the period of 2019–2024. The authors use panel data regression models to test the hypotheses. Findings The findings reveal a contextual divergence associated with executive personality. In Indonesia, CEO narcissism exacerbates the positive effect of greenwashing on SPCR. Conversely, in Singapore, CEO narcissism alleviates this risk. Research limitations/implications This study demonstrates that the psychological trait of CEO narcissism can provoke varying market reactions depending on the institutional environment. Stakeholders should consider both the CEO’s personality traits and the institutional framework when evaluating ESG disclosures. Regulatory agencies in emerging markets should be stricter in verifying ESG disclosures issued by narcissistic CEOs, given the greater risk of opportunism. Originality/value This study examines the interplay between CEO narcissism as a psychological trait and ownership structure as a governance mechanism in moderating the effects of greenwashing. The development of the “narcissistic greenwashing” concept represents a novel contribution that significantly enhances the literature on corporate governance and behavioral finance.