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The role of independent directors in mitigating corporate greenwashing: evidence from board voting in China

Author

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  • Li Ma
  • Jiazhu Li
  • Louis T. W. Cheng
  • Jerry Cao

Abstract

This study examines the role of independent directors in detecting and mitigating corporate greenwashing using unique board voting data from China. The analysis shows that independent directors are more likely to dissent when corporate greenwashing is severe, and their dissenting actions help deter future greenwashing. Moreover, the study reveals that entrenched board hierarchies weaken independent directors’ ability to challenge misleading ESG disclosures, highlighting the impact of internal power dynamics on governance effectiveness. Additionally, independent directors with an environmental background are even more likely to dissent, suggesting that domain-specific expertise enhances ESG oversight. By identifying the factors that enable or constrain independent directors, this study contributes to the understanding of corporate governance in ESG oversight. The findings offer insights for policymakers, stakeholders, and firms aiming to strengthen board independence and promote sustainable corporate practices.

Suggested Citation

  • Li Ma & Jiazhu Li & Louis T. W. Cheng & Jerry Cao, 2025. "The role of independent directors in mitigating corporate greenwashing: evidence from board voting in China," The European Journal of Finance, Taylor & Francis Journals, vol. 31(11), pages 1405-1425, July.
    • Handle: RePEc:taf:eurjfi:v:31:y:2025:i:11:p:1405-1425
    DOI: 10.1080/1351847X.2025.2481957
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