Evaluating Board Oversight Mechanisms and Audit Committee Competence in Preventing Corporate Environmental Misrepresentation

• Abiodun Okunola

  Ladoke Akintola University Technology

  Author

Corporate environmental misrepresentation, commonly termed greenwashing, represents a critical governance failure where firms decouple symbolic environmental disclosures from substantive performance . Despite growing regulatory attention, the effectiveness of specific board oversight mechanisms and audit committee competencies in preventing such misrepresentation remains insufficiently understood. This study evaluates how board independence, audit committee financial expertise, and risk oversight effectiveness collectively influence corporate environmental misrepresentation. Using panel regression analysis on 152 publicly listed firms over 2015–2024, the research validates a framework demonstrating that audit committee financial expertise significantly enhances risk oversight effectiveness, which in turn reduces environmental misrepresentation, confirming a partial mediation effect . The proposed integrated governance framework achieves 89.4% classification accuracy in identifying firms at risk of environmental misrepresentation, substantially outperforming traditional disclosure-based screening methods. Key predictors include audit committee financial expertise (β = −0.342, p < 0.01), board independence (β = −0.287, p < 0.05), and risk oversight effectiveness (β = −0.401, p < 0.001). These findings extend agency and stakeholder theories by demonstrating that structured risk oversight processes mediate the expertise-disclosure relationship, providing actionable metrics for regulators, boards, and stakeholders to strengthen environmental transparency and accountability.

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Copyright (c) 2026 Abiodun Okunola (Author)

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