This research seeks to determine the correlation between stakeholder sentiment and dysfunctional managerial actions. This study specifically investigates how negative stakeholder sentiment about a firm's emission action and pay inequity impacts the likelihood of greenwashing and earnings management, respectively. This research provides scientific evidence of the factors behind dysfunctional managerial behavior, specifically how companies use tactics to mask their true circumstances and manage negative stakeholder perceptions. These findings can help regulators, activists, and stakeholders understand and address potential managerial misconduct regarding a firm's ESG performance. A deeper understanding of the motivations behind these actions could allow governance to enforce accuracy-improving practices, such as independent third-party validation.
