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Does greenwashing promote investment inefficiency: Evidence from the Chinese market

Author

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  • Wang, Yaopeng
  • Zhang, Jinhong
  • Zhang, Yue

Abstract

We explore the relationship between corporate greenwashing behaviour and investment inefficiency. Using a large, unique sample from the Chinese market between 2008 and 2023, we find that greenwashing behaviour can increase investment inefficiency. Information asymmetry and financial constraints serve as two channels through which greenwashing contributes to investment inefficiency. Our results hold under several robustness checks. Overall, our study provides important empirical evidence and managerial implications for corporations, investors, and regulators to address greenwashing and simultaneously improve resource allocation efficiency.

Suggested Citation

  • Wang, Yaopeng & Zhang, Jinhong & Zhang, Yue, 2026. "Does greenwashing promote investment inefficiency: Evidence from the Chinese market," Global Finance Journal, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:glofin:v:70:y:2026:i:c:s104402832600027x
    DOI: 10.1016/j.gfj.2026.101259
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    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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