Research on the Effect of Corporate Greenwashing on Environmental Rating Divergence

The question of whether corporate greenwashing leads to divergence in ESG ratings among rating agencies remains underexplored. This study examines A-share listed companies in China from 2018 to 2022, employing text analysis to measure corporate greenwashing intensity. Using environmental rating data from WIND, Huazheng, and Bloomberg, we empirically demonstrate that corporate greenwashing significantly amplifies divergence in environmental ratings across agencies. This conclusion holds robust after rigorous tests, including instrumental variable (IV) approaches and propensity score matching (PSM). Mechanism analysis reveals that higher corporate information transparency mitigates the positive impact of greenwashing on rating divergence. Heterogeneity analysis indicates that the positive effect of greenwashing on rating divergence is more pronounced in non-heavily polluting industries and firms whose CEOs lack environmental expertise. This research extends the literature on the determinants of greenwashing and environmental rating divergence, providing empirical evidence to promote standardized ESG disclosure and curb corporate greenwashing practices.