The green fog: the negative fallout of greenwashing on corporate reputation

Purpose This study aims to investigate how corporate greenwashing behavior undermines corporate reputation through the lens of information disclosure quality, with a focus on heterogeneous effects across ownership types, lifecycle stages and regional markets. Design/methodology/approach Using empirical data from listed companies on the main boards of the Shanghai and Shenzhen A-share markets, the study uses a fixed-effects regression model to analyze the nexus between greenwashing and corporate reputation. To address endogeneity concerns, instrumental variable approaches and propensity score matching methods are adopted. Mechanism analysis further examines the moderating role of information disclosure quality. Findings The results indicate that greenwashing behavior negatively influences corporate reputation. Furthermore, the mechanism test reveals that the negative impact is weakened as the quality of information disclosure improves. Additionally, the study reveals that the impact of greenwashing behavior on corporate reputation is more pronounced in state-owned enterprises, enterprises in the maturity stage and enterprises in the eastern regions. Originality/value The study challenges the linear assumption of ESG disclosure on reputation by revealing greenwashing’s “masking effect” on corporate reputation, thereby enriching the environmental, social and governance (ESG) paradox theory. Furthermore, the study integrates institutional heterogeneity and spatial economic factors into the greenwashing–reputation framework, offering contextualized insights for emerging markets. In addition, the paper offers firms practical advice on avoiding greenwashing and managing reputation. It also proposes strategies for regulators to enhance disclosure and conduct targeted supervision.