Speculative culture and corporate greenwashing: Evidence from China

Abstract

As culture plays an important role in corporate decisions, this paper examines whether and how the culture of speculation affects corporate greenwashing. Using data of China's A-share listed companies over the period of 2010–2022 and data of provincial lottery sales as a proxy for speculative culture, we find that regional speculative culture positively affects corporate greenwashing. The effect is more pronounced among state-owned firms, firms with high managerial overconfidence and weak corporate governance, and firms located in low-level marketization and poor legal environment. Further, mechanism tests show that speculative culture increases cash flow volatility, agency costs, and managerial self-interest, through which corporate greenwashing is affected. This study adds to the literature on the determinants of corporate greenwashing from a perspective of informal institutions.