arbiter
JournalsAccount

Does positive investor sentiment induce firm greenwashing? Evidence from China

Wenlu Zhang et al.

International Journal of Emerging Markets2026https://doi.org/10.1108/ijoem-05-2025-1013article
AJG 1ABDC B
Weight
0.50

Abstract

Purpose Amid the growing global emphasis on sustainable development, some firms strategically engage in greenwashing to manage their stakeholder perceptions. This study examines whether and how investor sentiment, as a salient behavioral bias in capital markets, influences the adoption of symbolic environmental, social, and governance practices. Design/methodology/approach Using data from Chinese A-share listed firms from 2011 to 2022, we construct an investor sentiment index and a greenwashing score to empirically test the proposed relationship. Findings Our results show that: (1) Positive investor sentiment intensifies firms’ engagement in greenwashing. (2) This effect is mediated by heightened managerial myopia and enhanced risk tolerance. (3) This promoting effect is more pronounced in firms with poorer internal governance and weaker external governance. Originality/value Overall, this study reveals a potential adverse consequence of positive investor sentiment, offering a new perspective on firms’ hypocrisy on the issue of sustainable development.

Open via your library →

Cite this paper

https://doi.org/https://doi.org/10.1108/ijoem-05-2025-1013

Or copy a formatted citation

@article{wenlu2026,
  title        = {{Does positive investor sentiment induce firm greenwashing? Evidence from China}},
  author       = {Wenlu Zhang et al.},
  journal      = {International Journal of Emerging Markets},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1108/ijoem-05-2025-1013},
}

Paste directly into BibTeX, Zotero, or your reference manager.

Flag this paper

Does positive investor sentiment induce firm greenwashing? Evidence from China

Flags are reviewed by the Arbiter methodology team within 5 business days.

Evidence weight

0.50

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

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
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.