University of Oulu

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.

Effects of greenwashing on financial performance : moderation through local environmental regulation and media coverage

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Author: Li, Wei1,2; Li, Weining1; Seppänen, Veikko2;
Organizations: 1School of Business Administration, South China University of Technology, Guangzhou, China
2Martti Ahtisaari Institute, University of Oulu,Oulu, Finland
Format: article
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 0.7 MB)
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Language: English
Published: John Wiley & Sons, 2022
Publish Date: 2023-07-04


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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Series: Business strategy and the environment
ISSN: 0964-4733
ISSN-E: 1099-0836
ISSN-L: 0964-4733
Volume: 32
Issue: 1
Pages: 820 - 841
DOI: 10.1002/bse.3177
Type of Publication: A1 Journal article – refereed
Field of Science: 512 Business and management
Funding: This research was supported by the National Natural Science Foundation of China (Grant No. 71772068) and the Humanity and Social Science Program Foundation of the Ministry of Education of China (Grant No. 17YJA630044).
Copyright information: © 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.