Lifting the Green Fog: Government Environmental Attention and Corporate Greenwashing

ABSTRACT This study examines the relationship between government environmental attention and corporate greenwashing, with particular emphasis on the role of implicit institutional frameworks shaped by local governments' allocation of attention to environmental matters in mitigating irresponsible corporate actions. Using an attention‐based view and signaling theory, we empirically investigate the impact of government environmental attention on corporate greenwashing and identify the mechanisms involved. Our findings reveal that increased government focus on environmental issues significantly curtails corporate greenwashing by alleviating firms' financial constraints, boosting their innovation capabilities, and improving managers' green perceptions. Moderating effect tests indicate that command‐and‐control environmental regulations enhance the effectiveness of governmental environmental attention in reducing corporate greenwashing, while a close relationship between local governments and firms weakens its inhibitory effect on greenwashing.