The Impact of Fraud Perception and ESG-Washing on Investment Trust: Integrating Corporate Governance Theory and Empirical Evidence

This study examines the relationship between perceptions of corporate fraud, Environmental, Social, and Governance (ESG) disclosure credibility, and investment decision-making. Drawing on theories of corporate governance, signalling, and legitimacy, it investigates whether prior experiences and perceptions of financial misrepresentation influence investor trust in ESG disclosures. A structured questionnaire was distributed to 133 respondents across professional sectors, with data analysed using descriptive statistics and Chi-square tests to explore associations between demographic characteristics, perceptions of ESG-washing, and investment preferences. The findings reveal that demographic variables such as gender, age, and professional sector do not significantly shape attitudes toward ESG-washing or trust in ESG disclosures. However, a statistically significant relationship emerges between perceptions of misleading financial reporting and the impact of ESG-washing on investment trust, indicating that prior exposure to or awareness of corporate misconduct heightens scepticism toward non-financial disclosures. These results underscore the interconnected nature of financial and sustainability reporting credibility, highlighting the importance of integrated corporate governance strategies to strengthen investor confidence. The study contributes to the literature by bridging empirical insights with theoretical debates on transparency, integrity, and market trust, offering policy recommendations for enhancing the reliability of ESG communication.