Does Performance Feedback Drive Greenwashing and Brownwashing? Evidence from China’s Capital Market

Against the policy backdrop of high-quality development and the “Dual Carbon” goals, corporate environmental responsibility and green governance have emerged as core drivers of corporate value creation and resource allocation in capital markets. However, in practice, corporate environmental disclosure has increasingly degenerated into an impression management tool. Using a sample of China’s A-share listed companies from 2011 to 2024, this paper combines text analysis of annual reports with green patent data to systematically examine the impact of performance feedback on corporate strategic environmental decoupling, drawing upon the behavioral theory of the firm and legitimacy theory. The findings are as follows: First, negative performance feedback significantly increases corporate greenwashing propensity, whereas positive performance feedback significantly strengthens corporate brownwashing behavior. Second, government regulation amplifies the costs of falsifying environmental information, significantly suppressing the positive impact of negative performance feedback on greenwashing, but exacerbating the positive impact of positive performance feedback on brownwashing. Conversely, media attention amplifies the benefits of corporate green performances, significantly strengthening the catalytic effect of negative performance feedback on greenwashing, while effectively suppressing the positive impact of positive performance feedback on brownwashing. Third, heterogeneity analysis reveals that the impact of performance feedback on corporate strategic decoupling in environmental disclosure is more pronounced among non-state-owned enterprises, firms facing high industry competitive pressure, and those in heavily polluting industries. By integrating greenwashing and brownwashing into a unified analytical framework, this study expands the research boundaries of corporate environmental disclosure and strategic behaviors. Furthermore, it deepens the application contexts of the behavioral theory of the firm within non-financial disclosure, deconstructs the myth of homogeneous governance effects under legitimacy pressure, and provides vital implications for investors, policymakers, and fund managers.