Financial experts become worse at spotting corporate lies when the media talks more about the greenwashing problem.
General awareness of a deceptive practice creates a psychological blind spot that reduces an expert's ability to detect it in a specific report. We assume that if we are warned about a scam, we will be more vigilant in looking for it. This research shows that media saturation can paradoxically dull our analytical senses. Experts may feel they are already informed, leading them to miss actual contradictions in banking documents. This means that public awareness campaigns might actually be making it easier for companies to hide their environmental impact.
Spotting "Washing": Can Financial Experts Detect the "Say-Do Gap" in Banking Reports?
SSRN · 6725405
Can financial experts detect potential greenwashing in ESG communications? Using an eye-tracking experiment with 128 professionals, we document a novel attention-detection-recommendation chain. Attention to textual contradictions increases expert detection sensitivity, significantly reducing investment recommendations. Framing impacts this chain in two distinct ways relative to a control condition: ESG exposure amplifies attention to contradictions, heightening detection-a domain-specific focusi