How does digital finance influence corporate greenwashing behavior?

This paper examines the effects of digital finance and corporate greenwashing as well as the underlying mechanisms using panel data from China's A-share, listed companies between 2012 and 2021. By employing panel regression and mediation effect models, we demonstrate that digital finance considerably inhibits corporate greenwashing. This conclusion remains robust after a series of tests, including replacing the core explanatory variables, lagging digital finance by one period, using alternative dependent variables, and applying the instrumental variables method. More importantly, we find that digital finance curbs corporate greenwashing by alleviating financing constraints and improving informational transparency. In addition, we reveal that digital finance has heterogeneous effects on corporate greenwashing. The inhibitory effect of digital finance on corporate greenwashing is more pronounced for high-polluting industries, under the conditions of strict environmental regulations, and in China's central and western regions.