The Impact Of Enterprises’ Greenwashing On Stock Price

With continuously growing public environmental consciousness,there have been soaring demands for green environmental protection of corporate products and images from both consumers and investors.Such demands make part of the corporate actively undertake social responsibilities,implement cleaner production and reduce pollutant emissions.Yet,a portion of enterprises implement ‘greenwashing’ for merely opportunistic reasons,promoting with the concepts of ‘environmental protection’ and‘low carbon’ and releasing green information without substantive green acts.At present,as a kind of ‘pseudo-social responsibility’,‘greenwashing’ has drawn increasing attention.Therefore,this paper selects 15387 sample data of China’s A-share listed companies from 2011 to 2020 to construct a mathematical model,with an empirical study conducted to explore the relationship between enterprises’ greenwashing behavior and stock price as well as the role of mandatory environmental regulation.The final results reveal that enterprises’ greenwashing will lead to the rise of stock prices,mispricing and disruption of order of the capital market.The mandatory environmental regulation by the government and regulatory authorities can inhibit the rise in stock prices and mispricing brought about by enterprises’ greenwashing,and the stronger the environmental regulation,the less the impact of greenwashing on the stock prices.From a theoretical point of view,this paper provides a research perspective of enterprises’ greenwashing for the influencing factors of stock prices and mispricing.It enriches existing research landscape of the capital market,and affords new insights into enterprises’ greenwashing.Practically,the conclusions drawn by this paper present a new focus of supervision and a novel idea on the protection of investors and promotion of the stable development of the capital market for the regulators of listed companies.The innovations of this paper are as follows: Firstly,the use of characteristics to quantify enterprises’ greenwashing,which provides new evidence for the definition and measurement of greenwashing.Secondly,on the basis of the impact of greenwashing on stock price,this paper further studies the impact of greenwashing on stock mispricing and the moderating effect of environmental regulation.Thirdly,taking China’s capital market as the background,this paper tests the existing conclusions in academic circles,and provides data and experience for the research on the relationship between enterprises’ greenwashing behavior and capital market in developing country.Last but not least,this paper enriches the research on the economic consequences of environmental regulation by quantifying the intensity of environmental regulation.