Who's Greenwashing Via the Media and What are the Consequences? Evidence From China

We show that those Chinese listed companies that are riding high on the media corporate social responsibility (CSR) ranking lists tend to have greater advertising (sales) expenses and poor environmental performance. This observation suggests that some companies opportunistically use media to greenwash their image, hoping to capture economic rents. Indeed, our evidence shows that greenwashing firms benefit in the lending market by exploiting the media to gain a kind of environmental, social, and governance (ESG) endorsement, thereby allowing them to achieve a lower cost of debt and to experience lower collateral obligations. The evidence suggests an adverse incentive to exploit ESG awareness via media coverage in weak institutional environments and opaque ESG disclosure regimes.