The power of crowds: The effect of online platform interactions on greenwashing

Hui Zheng and Jing Zhang

Corporate Social Responsibility and Environmental Management, 2024, vol. 31, issue 6, 6481-6503

Abstract: Greenwashing is a fraudulent environmental, social and governance (ESG) behavior. Previous literature has explored the impact of unidirectional disclosure on greenwashing. However, how interactive disclosures affect greenwashing has not been fully explored. Given the background of the regulatory transformation of China's capital market, we use data from the Q&A boards of the Shenzhen Stock Exchange (SZSE) “Interactive Easy” and Shanghai Stock Exchange (SSE) “SSE e‐Interactive” online platforms to investigate the impact of interactive disclosure between firms and retail investors on greenwashing. We find that online platform interactions (OPIs) inhibit greenwashing. Moreover, such negative effects are more pronounced for firms with high‐quality internal controls, high executive shareholding, high analyst coverage, low financing constraints, and executives with overseas backgrounds. Overall, our research provides empirical evidence that OPIs improve capital market efficiency by inhibiting greenwashing.

Date: 2024
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https://doi.org/10.1002/csr.2933

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Persistent link: https://EconPapers.repec.org/RePEc:wly:corsem:v:31:y:2024:i:6:p:6481-6503

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