Foreign Residency Rights and Corporate Greenwashing: Evidence from China’s Heavily Polluting Industries

Xuejiao Zhang, Hua Chen () and Ao Sun
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Xuejiao Zhang: College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China
Hua Chen: School of Accounting, Nanjing University of Finance and Economics, Nanjing 210023, China
Ao Sun: School of Accounting, Nanjing University of Finance and Economics, Nanjing 210023, China

Sustainability, 2025, vol. 17, issue 16, 1-18

Abstract: Against the backdrop of economic globalization and the increasing adoption of ESG principles, the phenomenon of Chinese private firms’ actual controllers obtaining foreign residency rights has garnered societal attention. Among the emerging issues, “whether and how actual controllers’ foreign residency rights influence corporate greenwashing behavior” has become a critical theoretical and practical concern. This study examines Chinese privately listed A-share companies in heavily polluting industries from 2010 to 2021, employing text analysis to identify symbolic and substantive environmental behaviors through the lens of environmental information disclosure, thereby constructing a comprehensive greenwashing measurement index system. The findings reveal a significant positive correlation between actual controllers’ foreign residency rights and corporate greenwashing, with this effect demonstrating long-term persistence. Heterogeneity analysis indicates that this relationship is more pronounced in companies where actual controllers exercise direct control compared to those with indirect control. Further tests demonstrate that enhanced internal control quality, increased media scrutiny, and stringent audit supervision can effectively mitigate the greenwashing-promoting effect of actual controllers’ foreign residency rights. The conclusions not only extend the theoretical framework of how executive characteristics influence corporate decision-making but also provide a reference governmental departments can use to improve the environmental regulatory policies of affiliates of holders of overseas residency rights.

Keywords: foreign residency rights; corporate greenwashing; corporate social responsibility; sustainable development; heavily polluting industries (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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