Financial constraints and corporate greenwashing strategies in China

Abstract

Corporate environmental responsibility, in response to the call for sustainable development, has become a critical ethical capital for companies to increase firm values and to obtain resources. However, this also gives rise to the concern of "greenwashing" that companies may selectively release environmental performance information to mislead the public and investors. Using the administrative environmental penalty data of all listed companies in China from 2017 to 2018, this research examines the corporate's greenwashing strategies. Our results show that greenwashing by listed companies in China is widespread, that only 13.6% environmental penalties have been disclosed by companies during our studied period. Companies choose to greenwash environmental performance mainly due to future demand for investment and financing, and companies with higher debt levels are found more likely to engage in greenwashing. Our findings suggest that it is not a rare practice for Chinese companies to risk their business ethics to pursue economic interests. It is necessary to enforce environmental information disclosure for listed companies in China and to increase their costs of unethical behaviors.

Determinants and consequences of corporate social responsibility decoupling—Status quo and limitations of recent empirical quantitative research

“…Second, financial aspects also increase CSR decoupling in line with legitimacy theory, agency theory and prior research (Xia et al, 2023). Results relied on international samples (e.g., Zhang, 2022a) and developed countries (USA; Ruiz‐Blanco et al, 2022).…”

“…Next to corporate governance, as financial determinants, industry (Ruiz‐Blanco et al, 2022), product market competition (Arouri et al, 2021), financial performance (output growth, net income; Kim & Lyon, 2015), financial constraints and leverage (Xia et al, 2023; Zhang, 2022a), analyst coverage (Zhang, 2022b), internationalization (Tashman et al, 2019), political connections (Xia et al, 2023) and cross‐listings (Yu et al, 2020) were recognized. Related to CSR factors , researchers relied on voluntary adoption of GRI reporting (Garcia‐Sanchez et al, 2022; Ruiz‐Blanco et al, 2022), UN Global Compact participation (Li & Wu, 2020), corporate environmental damage costs (Marquis et al, 2016), and corporate reputation risk score (Huang et al, 2022).…”

The impact of creating shared value strategy on corporate sustainable development: From resources perspective

“…The social performance data in this paper is from http://hexun.com, which evaluates and scores the social responsibility of listed companies. The financial data, such as sewage fee, ROA, and control variables, are from CSMAR (Xia et al, 2023). CSMAR is an economic and financial database developed based on the needs of academic research and China's national conditions.…”

Environmental backgrounds of CEOs and corporate environmental management information disclosure: The mediating effects of financing constraints and media attention

“…Financing constraints are often used in studies related to environmental management information disclosure (Chang et al, 2019; Sun et al, 2019; Y. Wang, Lei, et al, 2020; Kong et al, 2020), and some findings suggest that environmental management information disclosure and financing constraints have a negative relationship (Yao et al, 2019). For companies with higher financing constraints, enhancing environmental management information disclosure is more necessary (Xia et al, 2023). In this study, financing constraint (FC) is selected as a mediating variable and calculated by referring to most of the literature (Chan et al, 2013; Chen et al, 2022; Zhai et al, 2022), which is stated as the logarithm of the firm's SA index's absolute value; the higher the value, the greater the financing constraint the company faces.…”