Public Environmental Attention and Corporate Greenwashing in China

Corporate greenwashing is increasingly posing a severe threat to the effective implementation and evaluation of the United Nations Sustainable Development Goals. Apart from the regulatory pressure, the active participation of the public in environmental governance is essential in this regard. Through a theoretical and empirical lens, this study systematically examines the impact of public environmental attention (PEA) on corporate greenwashing and its underlying mechanism in the Chinese context. The data from A-share firms and the Baidu search index for prefecture-level cities are gathered from 2011 to 2020 and analyzed using 2SLS and various robustness tests. Results show that PEA can significantly suppress corporate greenwashing. The effect is more significant in high-polluting industries, regions with better rule of law, firms with non-political connections, and older executives with environmental backgrounds. Further analysis shows that PEA reduces greenwashing by inhibiting management's shortsighted behavior and increasing analysts' attention. Expanding the government's ecological concerns and strengthening environmental regulations enhance the inhibiting effect of PEA on greenwashing. The findings remain robust after a series of robustness and endogenous tests.