Effects of greenwashing on financial performance : moderation through local environmental regulation and media coverage
Li, Wei; Li, Weining; Seppänen, Veikko; Koivumäki, Timo (2023-01-06)
Li, W., Li, W., Seppänen, V., & Koivumäki, T. (2023). Effects of greenwashing on financial performance: Moderation through local environmental regulation and media coverage. Business Strategy and the Environment, 32( 1), 820– 841. https://doi.org/10.1002/bse.3177
© 2022 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
https://creativecommons.org/licenses/by-nc-nd/4.0/
https://urn.fi/URN:NBN:fi-fe2023070478096
Tiivistelmä
Abstract
Recent research suggests that the effect of greenwashing and corporate financial performance (CFP) is ambiguous. This call for study the contextual factors that create contingencies in the greenwashing–CFP relationship. Using a sample of 2816 observations covering 735 Chinese-listed firms in 21 different industries from 2013 to 2017, this research examines the effect of greenwashing on CFP and explores the moderating effects of local environmental regulation, media visibility and media favourability. Results show that greenwashing positively affects CFP and effect weakened with stringent environmental regulations and reversed with low media favourability. Our finding implies that stakeholders could hardly identify greenwashing in the context of an emerging economy with high-level information asymmetry. However, local environmental regulation and negative media coverage could reduce this information asymmetry, making greenwashing easier to be identified. It is the first study to investigate greenwashing–CFP relationship from institutional environment perspective.
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