Does environmental governance mitigate the detriment of greenwashing on innovation in China?

Lu Chen, Yan Ma, Gen-Fu Feng and Chun-Ping Chang

Pacific-Basin Finance Journal, 2024, vol. 86, issue C

Abstract: The study examines the impact of greenwashing on corporate innovation and its governance mechanisms using a sample of 1337 Chinese A-share listed enterprises from 2009 to 2021. The results indicate that greenwashing behavior inhibits corporate innovation output, adversely affecting long-term value realization. More importantly, we explore positive roles of government and corporate internal environmental governance measures in regulating corporate deceptive “greenwashing” behavior. Through environmental policy tools, such as environmental subsidies and penalties, governments can provide positive incentives and negative constraints for corporate environmental governance. Furthermore, improving green investment and board environmental background can build a virtuous corporate internal incentive mechanism. Both inhibit the costs and incentives of greenwashing, prompting enterprises to focus more on long-term development and innovation investment. Additionally, greenwashing has more significant effects in green innovation, high-tech industries, and high-financing constrained enterprises. Our findings provide new insights into the economic consequences of greenwashing and its effective governance measures.

Keywords: Environmental governance; ESG; Greenwashing; Innovation (search for similar items in EconPapers)
JEL-codes: D22 O31 Q58 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X24002014
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:86:y:2024:i:c:s0927538x24002014

DOI: 10.1016/j.pacfin.2024.102450

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().