THE EFFECT OF GREENWASHING TOWARDS FIRM VALUE WITH THE MODERATING FACTOR OF FAMILY OWNERSHIP

Abstract

Growing market attention to sustainability has increased pressure on firms to expand ESG disclosure, but disclosure may not always be accompanied by substantive sustainability performance. This study examines the effect of greenwashing on firm value, proxied by price-to-book value (PBV), and evaluates whether family ownership moderates this relationship. The sample consists of 120 non-financial companies listed on the Indonesia Stock Exchange during 2021-2024, resulting in 480 firm-year observations. Greenwashing is measured as the annually normalized gap between ESG disclosure score and ESG performance score, with positive gaps treated as greenwashing. Using panel regression with a random effects specification, this study finds that greenwashing has a negative and significant effect on firm value. Family ownership has no significant direct effect on firm value and does not significantly moderate the greenwashing-firm value relationship. Additional conditional tests show that the market penalty for greenwashing is significant in non-family firms but not in family firms. These findings indicate that investors increasingly value the credibility of ESG performance, while family identity may create a reputational buffer in some firms.