Does local government environmental target affect firms' greenwashing? evidence from listed firms in China

Hai Jiang, Zhiyuan Ning and Zhitao Lin

Journal of Asian Economics, 2025, vol. 100, issue C

Abstract: This study investigates the relationship between environmental targets and corporate greenwashing from the perspective of local government behavior. The findings suggest that the setting of environmental targets by local governments actually promotes corporate greenwashing. The possible mechanisms include declines in substantive environmental performance and reductions in the quality of environmental disclosure. In addition, this facilitating effect is more pronounced for firms with poor financial status, low intensity of analyst coverage, lack of ISO14001 environmental certification, high pollution emissions and high environmental standards. Further analysis finds that local government economic growth and environmental governance competition, as well as the 2013 reform of the officials' appraisal system, reinforce the facilitating effect of environmental targets on corporate greenwashing. These findings not only provide a novel explanatory framework for understanding the motivations behind corporate greenwashing, but also provide valuable insights for strengthening governance against such behavior.

Keywords: Government environmental target; Corporate greenwashing; Environmental information disclosure; Local government behavior (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:100:y:2025:i:c:s1049007825001472

DOI: 10.1016/j.asieco.2025.102023

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