How does green finance influence enterprise greenwashing tendencies? Theoretical and empirical evidence from China

As green finance emerges as a critical institutional mechanism for directing capital toward sustainable development, increased attention has been paid to the authenticity of corporate environmental disclosures. The widespread occurrence of greenwashing not only weakens the effectiveness of policy tools but also distorts the capital market's assessment of firms' environmental performance. Using panel data from Chinese A-share listed companies spanning 2010–2023, this study employs a two-way fixed effects model to systematically examine the impact of green finance development on corporate greenwashing tendencies. The empirical results demonstrate that green finance significantly reduces the likelihood of greenwashing. Mechanism analysis reveals that this effect primarily operates through three channels: lowering green agency costs, alleviating financing constraints, and enhancing managerial awareness of environmental issues. Heterogeneity analyses indicate that the inhibitory effect of green finance is more pronounced among state-owned enterprises, firms in regions with stricter environmental regulation, and those with greater analyst coverage. Overall, this study provides robust microlevel evidence on the behavioral impact of green finance on firms' practices and offers valuable theoretical and policy implications for designing more effective and targeted green finance frameworks.