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Brightening the Dark Side of Environmental Regulation: Evidence from Green Revenues and Greenwashing Behaviors

June Cao et al.

Journal of International Accounting Research2025https://doi.org/10.2308/jiar-2024-025article
AJG 2ABDC A
Weight
0.44

Abstract

Unintended consequences of environmental regulations can diverge from their original goals, undermining the validity and effectiveness and potentially leading to new challenges separate from those originally targeted for resolution. This study addresses the hot-debated question of whether and how green revenues serve as a pivotal factor in mitigating the unintended consequences of stringent environmental regulations. Using a difference-in-differences model, we find firms significantly enhance their greenwashing practices after China’s Emission Trading Scheme (ETS). However, we document that ETS firms generating green revenues significantly reduce their greenwashing practices. We identify firms’ green awareness, ability for green innovations, and environmental transformation as the underlying mechanisms. Our findings align with the resource-based view and stakeholder theory. Our study provides policymakers and practitioners with ex ante evidence on how to mitigate the unintended consequences of environmental regulations, preserving their validity and effectiveness. Data Availability: Data used in this study are available from the sources identified in the text. JEL Classifications: G38; M41; Q56.

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https://doi.org/https://doi.org/10.2308/jiar-2024-025

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@article{june2025,
  title        = {{Brightening the Dark Side of Environmental Regulation: Evidence from Green Revenues and Greenwashing Behaviors}},
  author       = {June Cao et al.},
  journal      = {Journal of International Accounting Research},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.2308/jiar-2024-025},
}

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Brightening the Dark Side of Environmental Regulation: Evidence from Green Revenues and Greenwashing Behaviors

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Evidence weight

0.44

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.32 × 0.4 = 0.13
M · momentum0.57 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.