ESG greenwashing and equity mispricing: Evidence from China

Lin, Xudong; Zhu, Hao; Meng, Yiqun

doi:10.1016/j.frl.2023.104606

Cited by 26 publications

(6 citation statements)

References 37 publications

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“…Yue and Li's study demonstrates that media attention significantly hinders corporate greenwashing, with executive risk aversion positively reinforcing this effect [57]. This finding is consistent with Du and Lin et al, which signals the importance of media attention in alleviating asymmetric information conditions, hence reducing greenwashing behavior [50,51].…”

Section: Greenwashingsupporting

confidence: 76%

“…Contrary to conventional thinking, Li et al find a positive association between greenwashing and corporate financial performance proxied by return on equity, through analyzing Chinese-listed firms across 21 industries [51]. However, this effect weakens under stringent environmental regulations and high media coverage, indicating that stakeholders struggle to identify greenwashing in high-information-asymmetry environments.…”

Section: Greenwashingmentioning

confidence: 89%

“…Greenwashing hurts not only stock returns but also market valuation. The study conducted by Lin et al investigates the impact of greenwashing on equity mispricing in Chinese firms using a firmlevel panel dataset spanning 2011 to 2021 [51]. The analysis reveals a positive association between greenwashing and equity mispricing.…”

Section: Greenwashingmentioning

confidence: 99%

See 2 more Smart Citations

A Review of Corporate Social Responsibility Decoupling and Its Impact: Evidence from China

Luan

2024

Sustainability

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CSR decoupling refers to the misalignment between a company’s stated CSR policies and its actual practices, resulting in issues like diminished financial performance and heightened risk. While initially explored in developed economies such as the US, recent research has shifted focus towards developing nations like China. However, a comprehensive review of CSR decoupling literature in the Chinese market remains lacking. Previous research typically examines the decoupling phenomenon at the general level of CSR, without considering the distinct impacts of its three key components: environmental, social, and governance pillars. Our study seeks to address this gap by conducting a comprehensive review of CSR decoupling covering 82 related studies, specifically analyzing its environmental, social, and governance dimensions within the context of China. Our findings offer valuable insights for both future research on CSR decoupling in China and policymaking. Firstly, there is a pressing need to prioritize investigations into means–ends decoupling, given the constraints on policy–practice decoupling imposed by stringent regulations. Secondly, the role of government policies in shaping CSR practices is pivotal. Future research could delve into the impacts of policy shocks using quasi-experimental designs. Thirdly, emerging issues like workplace safety, the executive pay gap, and gender diversity are gaining prominence in China’s CSR landscape. Lastly, the dominance of state ownership presents significant challenges to corporate governance, warranting further exploration.

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Section: Greenwashingsupporting

confidence: 76%

Section: Greenwashingmentioning

confidence: 89%

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A Review of Corporate Social Responsibility Decoupling and Its Impact: Evidence from China

Luan

2024

Sustainability

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“…Furthermore, Hesarzadeh and Rajabalizadeh confirm a positive correlation between readability and information efficiency [89] (information efficiency refers to the extent that market prices reflect all relevant information, and it is an important aspect of the quality of capital markets [90]. Evidence shows that corporate greenwashing has a negative impact on stock market efficiency [62]). And this correlation is stronger for companies facing higher information asymmetry.…”

Section: Conditioning Effect Of Information Asymmetrymentioning

confidence: 93%

“…Prior studies have analyzed greenwashing from different aspects, including its drivers such as the characteristics of the company and the management team [60], its consequences such as green trust [61] and equity mispricing [62], and its deterrents including the institutional pressures and company visibility [54]. However, there is a gap in the existing literature when it comes to investigating the relationship between ESG disclosure readability and greenwashing.…”

Section: Corporate Greenwashingmentioning

confidence: 99%

Peeking into Corporate Greenwashing through the Readability of ESG Disclosures

Hu,

Li,

et al. 2024

Sustainability

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Faced with the widespread issue of greenwashing, there is a pressing need for an effective approach to assess the extent of corporate involvement in such hypocritical practices. This study aims to address this concern by examining the association between corporate ESG disclosures’ readability and greenwashing. We gauge the readability using a modified Fog Index and construct a company’s peer-relative greenwashing score based on data from third-party databases. The empirical analysis reveals a negative relationship between the level of corporate greenwashing and the readability of its ESG disclosures, suggesting that companies whose ESG disclosures are more readable are less likely to engage in greenwashing. This negative relationship is particularly pronounced in companies characterized by higher levels of information asymmetry. However, the relationship is weaker after 2018, when the “Code of Corporate Governance for Listed Companies” was implemented. In conclusion, our research highlights the significance of ESG disclosure readability in effectively conveying and predicting corporate greenwashing practices. This study provides valuable insights for investors seeking to evaluate corporate performance and make well-informed investment decisions.

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Unveiling the influence of corporate greenwashing on employees' pro‐environmental behavior: A cross‐cultural study from China, United Kingdom, Republic of Korea, and Japan

Tao,

Chao

2024

Corp Soc Responsibility Env

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Corporate greenwashing and pro‐environmental behavior of employees have attracted a significant amount of research attention in journals related to corporate governance, green and sustainable development. However, limited research has currently investigated the relationship between the two, especially in today's globalized business environment. To fill this research gap, this study conducts a cross‐cultural validation of connection between the two, covering four countries: China, United Kingdom, Republic of Korea, and Japan. The study uses structural equation model and fsQCA methods for empirical analysis. The empirical results reveal that in China, United Kingdom, Republic of Korea, and Japan: (1) corporate greenwashing suppresses employees' pro‐environmental behavior; (2) corporate greenwashing leads to employees developing perceptions of corporate hypocrisy, negative pro‐environmental attitudes, and organizational cynicism; (3) corporate hypocrisy perception, negative pro‐environmental attitude, and organizational cynicism lead to employees displaying negative pro‐environmental behaviors; (4) corporate hypocrisy perception, negative pro‐environmental attitude, and organizational cynicism significantly mediate the influence of corporate greenwashing on employees' pro‐environmental behavior; (5) the mediating effects of these three variables do not significantly differ across the four countries; (6) the analysis results from the fsQCA method show that in China, there are 6 configurations leading to employees displaying significant (strong) negative pro‐environmental behaviors, while in the United Kingdom there are 5, and in the Republic of Korea and Japan there are 3 and 5, respectively. This cross‐cultural study offers insights for corporate management, aiding in understanding and mitigating the effects of greenwashing on employee pro‐environmental behavior. It also bolsters the creation of efficacious corporate environmental practices policies and serves as a resource for future cross‐cultural environmental preservation and corporate governance research.

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ESG greenwashing and equity mispricing: Evidence from China

Cited by 26 publications

References 37 publications

A Review of Corporate Social Responsibility Decoupling and Its Impact: Evidence from China

A Review of Corporate Social Responsibility Decoupling and Its Impact: Evidence from China

Peeking into Corporate Greenwashing through the Readability of ESG Disclosures

Unveiling the influence of corporate greenwashing on employees' pro‐environmental behavior: A cross‐cultural study from China, United Kingdom, Republic of Korea, and Japan

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