How does perception of economic policy uncertainty affect corporate greenwashing?

Purpose In the context of macroeconomic fluctuations and uncertainty in policy changes, it is essential to understand how companies adapt their environmental strategies and marketing tactics to ensure survival and growth. This study, therefore, examines the impact of perceived economic policy uncertainty on corporate greenwashing. Design/methodology/approach Based on panel data from listed companies on the Chinese A-share market between 2013 and 2022, this paper employs a high-dimensional fixed effects model to explore the impact of perceived economic policy uncertainty (PEPU) on corporate greenwashing behavior. Findings The results show that higher PEPU increases greenwashing, with agency costs and investor sentiment mediating the relationship. Corporate credit availability and managerial short-sightedness positively moderate this effect. Heterogeneity analysis reveals that non-state-owned enterprises in central and western regions, particularly those with weak environmental regulation and high pollution, are most impacted by PEPU. Practical implications This paper provides practical guidance for how to avoid the phenomenon of green reshuffle in economic and environmental policies and encourages enterprises to take more real and effective environmental protection measures. Originality/value These findings highlight the importance of considering corporate responses to policy uncertainty when formulating economic and environmental policies. They provide valuable insights for emerging economies in fostering genuine corporate environmental behavior and promoting sustainable development.