Ownership concentration and corporate greenwashing in China's capital markets: Based on a multi-actors perspective

Abstract

This research employs the Word Vector Technique to construct a greenwashing index and examine a subset of Chinese A-share listed firms spanning from 2011 to 2021. The study indicates that a substantial equity stake owned by the primary largest shareholder is associated with the phenomenon of greenwashing within a company. This study also suggests that this relationship can be attributed to executives engaging in opportunistic share selling subsequent to the company's greenwashing activities. Retail investors may fail to detect companies' deceptive environmental disclosures. In contrast, external professional monitoring has the capacity to mitigate greenwashing resulting from ownership concentration. Government interventions, such as political affiliations, investigations, and fair competition assessments, have the potential to effectively mitigate firms' greenwashing practices. The primary findings exhibit consistency even following the mitigation of substantial endogeneity concerns and the completion of robustness assessments.