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Does the green finance policy motivate firms to greenwash? A quasi-natural experiment based on the "Green finance reform innovation pilot zones"

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  • Huang, Xiaowu
  • Li, Renzhi
  • Chen, Xingyu

Abstract

To foster the growth of the green economy and support sustainable development, green finance reform innovation pilot zones (GFRIPZ) have been established since 2017 in China. This paper aims to comprehensively investigate how the green finance reform innovation policy affects corporate greenwashing behavior with data from Chinese listed companies from 2014 to 2020. First, the empirical results obtained using the staggered difference-in-differences model indicate that the implementation of the GFRIPZ policy significantly motivates firms to engage in greenwashing behavior. Second, we find that firms under non-state-owned enterprises (non-SOEs) ownership, in non-green industries, and in eastern areas are more likely to engage in greenwashing. Third, our mechanism analysis shows that the GFRIPZ policy stimulates firms’ greenwashing behavior by exacerbating management myopia and promoting public environmental awareness. Our conclusions provide essential guiding implications for green finance policy design and implementation, while offering significant reference value for evaluating policy effectiveness and its unintended consequences.

Suggested Citation

  • Huang, Xiaowu & Li, Renzhi & Chen, Xingyu, 2025. "Does the green finance policy motivate firms to greenwash? A quasi-natural experiment based on the "Green finance reform innovation pilot zones"," The Quarterly Review of Economics and Finance, Elsevier, vol. 101(C).
    • Handle: RePEc:eee:quaeco:v:101:y:2025:i:c:s1062976925000213
    DOI: 10.1016/j.qref.2025.101980
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