The Impact of Greenwashing on Stock Price Synchronicity
Bibliographic Data
| ID | 21259285 |
|---|---|
| Authors | Yirong Lu (Nanfang Hospital), Yusuf Karbhari (0000-0003-4513-0928, Cardiff University), Xin Yang (0000-0002-0154-737X, Nanfang Hospital, corresponding author) |
| Year | 2025 |
| Publication date | 2025-12-05 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Business Ethics, the Environment & Responsibility (JOURNAL) |
| Journal identifiers | ISSN: 2694-6416 • E-ISSN: 2694-6424 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/beer.70060 |
| OpenAlex | W7108904696 |
| Language | EN |
| References cited | 68 |
This study investigates the influence of greenwashing on the alignment between firm‐level stock returns and broader market trends, with particular attention to the mediating roles of investor sentiment, media coverage and sustainable fund ownership. The findings reveal that greenwashing significantly reduces return synchronicity by embedding unreliable firm‐specific environmental signals into stock prices, thereby impairing market efficiency. The results demonstrate that greenwashing amplifies sentiment‐driven trading among investors, attracts increased media coverage that further disseminates and legitimizes biased environmental narratives, and influences institutional investment decisions—particularly by sustainable funds, which tend to rely on superficial environmental disclosures. Additionally, the heterogeneous analysis indicates that the influence of greenwashing on stock price synchronicity is insignificant in heavily polluting industries due to heightened regulatory oversight and stakeholder scrutiny. This research adds to existing knowledge by linking greenwashing to stock price synchronicity, providing new insights into how selective environmental disclosures influence market behavior. By exposing the negative consequences of biased environmental disclosures, this study highlights the urgent need for stronger accountability standards, robust environmental reporting frameworks, and stricter regulatory oversight. Such measures are essential to ensure transparency, uphold market integrity, and protect investors from the adverse effects of deceptive corporate practices
Closeness · Greenwashing · Stock exchange · Stock market · Stock price · Synchronicity · Auditing, Earnings Management, Governance · Corporate Social Responsibility Reporting · Sustainable Finance and Green Bonds
Moral Hazard and Observability
R2 around the world
Environmental Performance and Executive Compensation
The Framing of Decisions and the Psychology of Choice
From green advertising to greenwashing
Spotting Portfolio Greenwashing in Environmental Funds
What you see is what you get? Building confidence in ESG disclosures for sustainable finance through external assurance
Can penalties for environmental violations deter firms from engaging in greenwashing
Cost of debt financing, stock returns, and corporate strategic ESG disclosure
Beyond Baron and Kenny
Noise Trader Risk in Financial Markets
The moderator–mediator variable distinction in social psychological research
The Agenda-Setting Function of Mass Media
| Highly cited | No |
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