Managerial pessimism and corporate greenwashing

Purpose With the deepening of environmental, social, and governance (ESG) concepts and the expansion of investment scales, corporate greenwashing has attracted increasing attention. However, the impact of managerial pessimism on corporate greenwashing has received limited attention. Behavioral finance theory suggests that managers' sentiment biases significantly influence their strategic decisions. Therefore, this study aims to investigate the relationship between managerial pessimism and corporate greenwashing. Design/methodology/approach Based on behavioral finance theory and upper echelons theory, this paper conducts an empirical study using data from Chinese A-share listed companies from 2015 to 2022. Findings Results show that managerial pessimism has a significant positive correlation with corporate greenwashing, which remains robust after multiple robustness tests. This relationship operates through three mechanisms: enhanced perception of environmental pressure, increased risk aversion and intensified short-term orientation. Additionally, the proportion of independent directors, internal control quality and institutional ownership has significant negative moderating effects on this relationship. Furthermore, under conditions of high environmental regulatory intensity and high analyst coverage, the positive effect of managerial pessimism on corporate greenwashing is significantly weakened. Originality/value This study adopts the perspective of managerial pessimism, extends research on factors influencing corporate greenwashing and provides a novel perspective for identifying and preventing corporate greenwashing. Additionally, it reveals underlying mechanisms and moderating governance factors, offering theoretical foundations and practical implications for sustainable corporate governance practices.