Social media attention and corporate greenwashing: Evidence from China

Abstract

This study examines the effect of social media attention on corporate greenwashing using a sample of Chinese A-share listed firms from 2011 to 2021. We find that social media attention increases corporate greenwashing, and the effect is more pronounced for firms with negative financial performance and those with violations, supporting the pressure hypothesis. Drawing on fraud triangle theory, which considers the interplay of pressure, opportunity, and rationalization, we also find that the pressure effect is more pronounced for firms with higher CEO power, greater information asymmetry, as well as firms located in regions with a gambling culture and non-state-owned firms. This indicates that firms are more inclined to greenwash when they perceive an opportunity and can rationalize this behavior. Furthermore, our heterogeneity analyses demonstrate that the pressure effect is more significant for firms located in regions characterized by higher marketization, firms operating in non-heavily polluting industries, and those that do not provide assured non-financial reports. This study contributes to the literature on the role of social media and determinants of corporate greenwashing, providing important implications for firms' sustainable development.