Does Investor Attention Affect Corporate Greenwashing? Evidence from China

Abstract

Abstract Enhancing ESG performance has emerged as a crucial strategy for companies to bolster market value and competitiveness. However, this trend has sparked concerns about corporate greenwashing, where companies may selectively disclose ESG-related information to garner short-term benefits. Against this backdrop, using Chinese A-share listed companies from 2010 to 2022, we examine the impact of investor attention on corporate greenwashing. The findings reveal that investor attention significantly curbs corporate greenwashing. Mechanism analysis indicates that investor attention achieves this by alleviating corporate financing constraints and enhancing transparency in corporate information. Furthermore, moderating analysis suggests that enhancing internal controls and increasing environmental subsidies can strengthen the inhibitory effect of investor attention on corporate greenwashing. Finally, heterogeneity analysis demonstrates that the inhibitory effect of investor attention on corporate greenwashing is more pronounced in state-owned enterprises and companies facing high financing constraints. These findings not only contribute to the literature on investor attention but also offer insights for governing corporate greenwashing and advancing the dual-carbon goal. Keywords: Investor attention, Corporate greenwashing, Internal controls, Environmental subsidies, China.