Abstract
PurposeThis study aims to examine the timing of the disclosure of a firm’s environmental certification. In general, certifications comply with signaling and legitimacy theories and serve to bolster a firm’s reputation, financial performance and valuation, among other benefits. However, when a firm finds itself facing a reputational threat, it is unclear whether disclosing a recent certification would provide those same benefits or be perceived by investors as “greenwashing” or a disingenuous distraction from the threat.Design/methodology/approachThis study is based on a case and survey the authors developed that is supported in methodology and approach by past academic work.FindingsThe findings suggest that in the short term, the disclosure of the certification benefits the firm regardless of the current reputational environment, good or bad. More specifically, investors view the certification as a benefit (rather than an attempt to distract) even when its disclosure was immediately proceeded by a reputational threat.Research limitations/implicationsThis study is limited by the population of survey respondents from which the authors collected data and their internal predispositions and biases.Practical implicationsThis work is applicable to firms that have engaged in certifications or are considering such certifications as well as firms that provide certification services. The study is also relevant to stakeholders and consumers of information related to certifications.Originality/valueThis study is operationalized through the use of a case and survey the authors developed. The research question the authors attempt to answer is derived from a question raised in the literature. The authors are unaware of any other study that addresses this question.
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