Regional Digitalization and Corporate Greenwashing: The Relevance of Information Disclosure Quality

ABSTRACT Based on a sample of Chinese A‐share listed enterprises from 2012 to 2021, this study examines the effects and mechanisms of regional digitalization on corporate greenwashing. The findings indicate that regional digitalization initially exacerbates corporate greenwashing, but in the long run, it inhibits this behavior. The results from the mechanism analysis reveal that regional digitalization exacerbates corporate greenwashing by reducing information disclosure quality. Furthermore, our empirical results reveal heterogeneity in the impact of digitalization on greenwashing among different types of enterprises. The effect is significant for firms with non‐tech background CEOs, non‐tech firms, digital transformation firms, and firms within the Yangtze River Economic Belt and low firm level of corporate digitalization, likely because these firms are more inclined to use digitalization for image‐building or face stronger external pressures. Besides, the moderating roles of financing cost and cross‐listing status are tested. The study reveals that higher equity financing costs help reduce greenwashing. However, digitalization tends to amplify greenwashing behavior when equity financing costs are high. In contrast, debt financing costs show no significant impact on greenwashing. For cross‐listing, firms listed in both Mainland China and Hong Kong are generally less prone to greenwashing due to stricter disclosure requirements, but digitalization amplifies their potential for greenwashing behavior under dual regulatory systems that require compliance with both markets. This research contributes to understanding how digitalization can mitigate greenwashing and promote genuine environmental responsibility in the corporate sector.