Work

The Impact of Government Environmental Auditing on Corporate ESG Greenwashing

Year: 2026

Type: article

Abstract: ABSTRACT Government environmental auditing, as a critical tool for regulating corporate behaviour and promoting market green transformation, exerts a substantial influence in mitigating corporate ESG greenwashing practices. Focusing on A‐share listed corporations in China during the period 2009–2023, this analysis utilises a double machine learning approach to investigate the causal effects and internal mechanisms of government environmental auditing on corporate ESG greenwashing. The analysis indicates that: (1) Government environmental auditing exerts a significant inhibitory effect on corporate ESG greenwashing. This remains valid after rigorous testing. (2) Heterogeneity tests show that this inhibitory effect is stronger in state‐owned enterprises, heavily polluting corporations and large‐scale corporations. (3) In terms of mechanisms, government environmental auditing reduces corporate information disclosure catering, optimises green investment allocation and regulates earnings management activities and inefficient investments, thereby curbing corporate ESG greenwashing.

Source: International Journal of Finance & Economics

DOI: 10.1002/ijfe.70287

Authors: Zhonghua Cheng, Yanhao Yang

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: bronze

Funders: National Office for Philosophy and Social Sciences, National Social Science Fund of China

Awards: G282063317, G4044978036