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Does corporate greenwashing affect investors' decisions?

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  • Li, Tinghui
  • Shu, Xin
  • Liao, Gaoke

Abstract

Greenwashing creates a misleadingly positive image for corporations while leading to the misguidance of investors' behaviors. Based on the sample of Chinese A-share listed companies for the period 2008–2021, this paper investigates the impact of corporate greenwashing on investors’ decisions. The empirical results indicate that (i) greenwashing significantly improves short-term returns on corporate stocks, but reduces long-term returns; (ii) in the short term, investors are influenced by expressive manipulation rather than selective disclosure, but this impact is not sustainable, and both have an impact in the long term. These findings provide a new risk reminder for investors’ behaviors and have practical significance for government to promote the green development of corporations.

Suggested Citation

  • Li, Tinghui & Shu, Xin & Liao, Gaoke, 2024. "Does corporate greenwashing affect investors' decisions?," Finance Research Letters, Elsevier, vol. 67(PA).
    • Handle: RePEc:eee:finlet:v:67:y:2024:i:pa:s1544612324009073
    DOI: 10.1016/j.frl.2024.105877
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    References listed on IDEAS

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    Cited by:

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    3. Li, Jiao, 2024. "Controlling shareholders’ stock pledges and greenwashing–Evidence from China," Finance Research Letters, Elsevier, vol. 69(PB).
    4. Boying Wang & Runguo Xu, 2025. "How Industrial Output, Economic Growth, Environmental Technology, and Globalization Impact Load Capacity Factor in E7 Nations," Sustainability, MDPI, vol. 17(4), pages 1-18, February.
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    7. Singh, Vikram & Jain, Sonali & Singh, Shveta, 2025. "Identification and pricing of labelled green bonds," Finance Research Letters, Elsevier, vol. 73(C).

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