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Can social capital combat corporate greenwashing? evidence from China

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  • Kuai, Yicheng
  • Guo, Mengmeng

Abstract

We investigate whether social capital constrains corporate greenwashing, using the historical placement of revolutionary base areas in China as a source of plausibly exogenous variation in local norms. Using data from 2009 to 2023, we find that firms in regions with high social capital exhibit significantly less greenwashing. This effect operates through improved internal governance and external monitoring. The impact of social capital is more pronounced for firms without political connections, firms with strong managerial green awareness, and in heavily polluting and highly concentrated industries. Furthermore, we demonstrate that social capital promotes actual environmental performance. Our findings provide robust evidence that deep-rooted informal institutions are a critical governance mechanism for promoting corporate environmental authenticity.

Suggested Citation

  • Kuai, Yicheng & Guo, Mengmeng, 2026. "Can social capital combat corporate greenwashing? evidence from China," Finance Research Letters, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finlet:v:91:y:2026:i:c:s1544612326000310
    DOI: 10.1016/j.frl.2026.109500
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