Bank-firm relationships and corporate ESG greenwashing
Hongyu Liu, Jasman Tuyon, Jasman Tuyon, Jasman Tuyon
TL;DR
This study examines how bank-firm relationships and executives with banking backgrounds contribute to greenwashing in Chinese firms, emphasizing the role of financial incentives and transparency.
Contribution
The paper introduces the influence of bank shareholding and banking-experienced executives on greenwashing, linking it to executive compensation and financialization.
Findings
Firms with bank shareholding or banking-experienced executives show higher greenwashing tendencies.
Transparency reduces greenwashing, while financialization increases symbolic ESG disclosures.
Non-state-owned enterprises and firms in less financially developed regions are more prone to greenwashing.
Abstract
This study explores how bank-firm relationships and executives with banking backgrounds influence greenwashing among Chinese A-share listed firms, based on Institutional and Agency Theories. Firms with bank shareholding or banking-experienced executives show a higher propensity for greenwashing, driven by executive compensation structures tied to inflated ESG scores. Financialization amplifies symbolic ESG disclosures, while transparency reduces greenwashing. Heterogeneity analysis reveals that non-state-owned enterprises and firms in less financially developed regions are more affected. These findings highlight the need for robust governance and transparency to promote authentic ESG practices, offering insights into mitigating greenwashing in emerging markets.
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Taxonomy
TopicsCorporate Social Responsibility Reporting · Environmental Sustainability in Business · Energy, Environment, Economic Growth