The Impact of Digital Finance on Corporate Greenwashing: An Analysis from the Perspective of Corporate Financialization

Abstract

The effectiveness of digital finance in curbing corporate greenwashing is a major concern in recent research. By constructing a panel of data containing digital finance and greenwashing of A-share listed companies in China from 2011 to 2020, this paper empirically tests the impact and transmission mechanism of digital finance on corporate greenwashing behavior. Our results reveal that digital finance is positively associated with corporate greenwashing. The positive impact of digital finance on corporate greenwashing is more pronounced in non-state-owned enterprises, loss-making enterprises, enterprises in a more competitive market and enterprises with weaker information transparency. Concerning the mechanism exploration, digital finance increases corporate greenwashing by promoting financialization. Our findings suggest that better use of digital finance should be encouraged to reallocate resources from financialization to environmental protection projects, in pursuit of long-term sustainable development.

Keywords: Digital Finance, Greenwashing, Financialization, China