Controlling shareholders’ stock pledges and greenwashing–Evidence from China

This study examines whether controlling shareholders’ stock pledges may affect greenwashing. Controlling shareholders’ stock pledges can increase the commitment of controlling shareholders and reduce their risk-taking willingness. Both the existence and the percentage of controlling shareholders’ stock pledges are negatively related to greenwashing. The findings are robust to the 2SLS estimation with IV, PSM, entropy balancing, and other tests. Moreover, the effect is stronger for long-term stock pledges, suggesting that the longer duration of stock pledges may serve as a stronger motivation for controlling shareholders to restrain misconduct, which provides important insights on how to address greenwashing amid growing environmental concerns.