Faking for fortune: Emissions trading schemes and corporate greenwashing in China

Ruipeng Tan, Qijun Cai and Lulu Pan

Energy Economics, 2024, vol. 130, issue C

Abstract: Market-based environmental regulations are pivotal in facilitating the reduction of emissions. This paper employs a staggered difference-in-differences (DID) strategy to investigate the impact of Emissions Trading Schemes (ETS) on corporate greenwashing behavior. The findings suggest that ETS act as a catalyst for corporate greenwashing by intensifying financial distress, as demonstrated that the effect is notably more substantial among firms with heightened financing constraints and greater performance volatility. Further analysis reveals that corporate greenwashing behavior induced by ETS is more pronounced where market competition is higher, firms are smaller, R&D investment is lower, or intensity of environmental regulation is lower. This paper provides valuable insights for understanding the comprehensive picture of ETS.

Keywords: Emissions trading schemes; Greenwashing; Financial pressure (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:130:y:2024:i:c:s0140988324000276

DOI: 10.1016/j.eneco.2024.107319

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