The Impact of Corporate "Greenwashing" Behavior on Corporate Outward Foreign Direct Investment
Research Article
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The Impact of Corporate "Greenwashing" Behavior on Corporate Outward Foreign Direct Investment

Qi Liu 1*
1 Shanghai University of Finance and Economics
*Corresponding author: Liu1678539258@163.com
Published on 30 July 2025
Journal Cover
AEMPS Vol.205
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-293-5
ISBN (Online): 978-1-80590-294-2
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Abstract

With the increasing global emphasis on ESG (Environmental, Social, and Governance) investment principles, an increasing number of firms engaging in outward foreign direct investment (OFDI) are attempting to enhance their competitiveness in international markets by disclosing ESG-related information. However, some firms may exaggerate or embellish their ESG disclosures—known as "greenwashing"—to mislead consumers and investors. Therefore, examining the impact of greenwashing on Chinese firms’ OFDI is of significant importance. This study employs panel data of Chinese A-share listed companies from 2013 to 2023 and conducts regression analyses based on a set of econometric models. The results indicate that greenwashing behavior has a significantly positive effect on both the frequency and scale of firms’ OFDI. Further analysis reveals that greenwashing promotes OFDI by increasing government subsidies to enterprises. Heterogeneity analysis shows that this effect is more pronounced among state-owned enterprises and large-scale firms. This study contributes to the theoretical understanding of corporate OFDI motivations and provides practical insights for Chinese enterprises to better align with global green transition trends and participate more deeply in international industrial value chains.

Keywords:

Greenwashing, Outward Foreign Direct Investment (OFDI), Information Disclosure

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Liu,Q. (2025). The Impact of Corporate "Greenwashing" Behavior on Corporate Outward Foreign Direct Investment. Advances in Economics, Management and Political Sciences,205,77-88.

References

[1]. Xie Hongjun, Lv Xue. Responsible international investment: ESG and China's OFDI [J]. Economic Research, 2022, 57(3): 83-99.

[2]. Zhou, D. P.. (2024). The impact of “greenwashing” behavior in ESG disclosure on outward foreign direct investment. World Economic Research, (12), 18-31+133.

[3]. de Freitas Netto, S.V., Sobral, M.F.F., Ribeiro, A.R.B. et al. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19 (2020).

[4]. Wu, H.J., Y.Y. Xu & Y. Jiang. (2023). A review of corporate greenwash research. Friends of Accounting, (22), 53-60.

[5]. Wang, Shanshan & Wang, Lin. (2024). A Review and Prospect of Research on Corporate “Greenwashing” Behavior: Concept, Measurement and Influence Mechanism. China Collective Economy, (27), 113-116.

[6]. Donia, Magda & Sirsly, Carol-Ann. (2016). Determinants and consequences of employee attributions of corporate social responsibility as substantive or symbolic. European Management Journal. 34. 10.1016/j.emj.2016.02.004.

[7]. Lyon, Thomas P. and Maxwell, John W., Greenwash: Corporate Environmental Disclosure Under Threat of Audit (March 2006). Ross School of Business Paper No. 1055.

[8]. Wang YQ, Du JL, Wang K, 2014.Determinants of China's outward FDI location choice: Institutions, tax burdens and resource endowments [J]. Economic Research(12): 126-142.

[9]. Zhang L, Xu ZQ, 2017. How Do Cultural and Institutional Distance Affect China’s OFDI towards the OBOR Countries? [J]. Baltic Journal of European Studies, 7(1): 25-39.

[10]. He Junyong, Wan Chon, Zhang Shunming, 2021. Host country financial openness, institutional quality and China's outward FDI: Evidence from countries along the “Belt and Road” [J] Studies in International Finance (10): 36-45.

[11]. Tian Wei, Yu Miaojie, 2012. Enterprise productivity and outward foreign direct investment: an empirical study based on firm-level data [J]. Economics (Quarterly), (2): 383-408.

[12]. Liu Leah, He Yanlin, Wang Zhaofei, et al. 2015. Do Financing Constraints Affect Chinese Enterprises' Outward FDI? --A theoretical and empirical analysis based on micro perspective [J]. Financial Research, (8): 124-140.

[13]. Long Ting, Yi Changjun, Li Xue, et al. 2019. Equity Concentration, Institutional Investors and Firms' Outward Foreign Direct Investment Decisions-The Moderating Role of Redundant Resources [J]. International Trade Issues (2): 129-144.

[14]. HU Dameng, ZHONG Changbiao, HUANG Yuanzhe, 2020. Is government-enterprise linkage really conducive to enterprises' outward investment - an explanation based on social capital and human capital perspectives [J]. International Trade Issues (6): 56-67.

[15]. HUANG Sol-Bing, CHEN Wei, WANG Kai-Hui. External Financing Demand, Impression Management and Corporate Bleaching Green [J]. Comparison of economic and social systems, 2019(03): 81-93.

[16]. Zhang, H., 2016. a study of strategic interactions of inter-regional environmental regulation - an explanation of the universality of non-complete enforcement of environmental regulation [J]. China Industrial Economy (7): 74-90.

[17]. Li Zhe, Wang Wenhan, 2021. “Can the environmental responsibility performance of ”more words and fewer deeds“ affect the bank's access to credit: A textual analysis based on the dimensions of ‘words’ and ”deeds" [J]. A textual analysis based on the two dimensions of “words” and “deeds” [J]. Financial Research (12): 116-132.

[18]. Xu, Fang-Yan, Sun, Jing-Yi & Liu, Wei. 2011 A new species of the genus Pseudourostyla (Hymenoptera, Braconidae) from China. (2025). The impact of environmental information disclosure on outward foreign direct investment: empirical evidence from Chinese listed companies. International Economic and Trade Exploration, 41(01), 69-86.

[19]. Yu Lianchao, Li Xinyi, Wang Lei, 2023. Environmental standards soft connectivity and firms' outward foreign direct investment: a research perspective from international environmental certification [J]. Research on World Economy (3): 61-73.

[20]. Kretschmer T, Leiponen A, Schilling M, Vasudeva G. Platform ecosystems as meta-organizations: Implications for platform strategies. Strat Mgmt J. 2022; 43: 405–424.

[21]. Hu, P., Li, X., Li, N., Wang, Y., & Wang, D. D. (2024). Peeking into Corporate Greenwashing through the Readability of ESG Disclosures. Sustainability, 16(6), 2571.

[22]. Tang, Q. & Luo, D. (2007). (2007). An empirical study of government subsidy motives and their effects: Empirical evidence from Chinese listed companies. Financial Studies, (06), 149-163.

References

[1]. Xie Hongjun, Lv Xue. Responsible international investment: ESG and China's OFDI [J]. Economic Research, 2022, 57(3): 83-99.

[2]. Zhou, D. P.. (2024). The impact of “greenwashing” behavior in ESG disclosure on outward foreign direct investment. World Economic Research, (12), 18-31+133.

[3]. de Freitas Netto, S.V., Sobral, M.F.F., Ribeiro, A.R.B. et al. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19 (2020).

[4]. Wu, H.J., Y.Y. Xu & Y. Jiang. (2023). A review of corporate greenwash research. Friends of Accounting, (22), 53-60.

[5]. Wang, Shanshan & Wang, Lin. (2024). A Review and Prospect of Research on Corporate “Greenwashing” Behavior: Concept, Measurement and Influence Mechanism. China Collective Economy, (27), 113-116.

[6]. Donia, Magda & Sirsly, Carol-Ann. (2016). Determinants and consequences of employee attributions of corporate social responsibility as substantive or symbolic. European Management Journal. 34. 10.1016/j.emj.2016.02.004.

[7]. Lyon, Thomas P. and Maxwell, John W., Greenwash: Corporate Environmental Disclosure Under Threat of Audit (March 2006). Ross School of Business Paper No. 1055.

[8]. Wang YQ, Du JL, Wang K, 2014.Determinants of China's outward FDI location choice: Institutions, tax burdens and resource endowments [J]. Economic Research(12): 126-142.

[9]. Zhang L, Xu ZQ, 2017. How Do Cultural and Institutional Distance Affect China’s OFDI towards the OBOR Countries? [J]. Baltic Journal of European Studies, 7(1): 25-39.

[10]. He Junyong, Wan Chon, Zhang Shunming, 2021. Host country financial openness, institutional quality and China's outward FDI: Evidence from countries along the “Belt and Road” [J] Studies in International Finance (10): 36-45.

[11]. Tian Wei, Yu Miaojie, 2012. Enterprise productivity and outward foreign direct investment: an empirical study based on firm-level data [J]. Economics (Quarterly), (2): 383-408.

[12]. Liu Leah, He Yanlin, Wang Zhaofei, et al. 2015. Do Financing Constraints Affect Chinese Enterprises' Outward FDI? --A theoretical and empirical analysis based on micro perspective [J]. Financial Research, (8): 124-140.

[13]. Long Ting, Yi Changjun, Li Xue, et al. 2019. Equity Concentration, Institutional Investors and Firms' Outward Foreign Direct Investment Decisions-The Moderating Role of Redundant Resources [J]. International Trade Issues (2): 129-144.

[14]. HU Dameng, ZHONG Changbiao, HUANG Yuanzhe, 2020. Is government-enterprise linkage really conducive to enterprises' outward investment - an explanation based on social capital and human capital perspectives [J]. International Trade Issues (6): 56-67.

[15]. HUANG Sol-Bing, CHEN Wei, WANG Kai-Hui. External Financing Demand, Impression Management and Corporate Bleaching Green [J]. Comparison of economic and social systems, 2019(03): 81-93.

[16]. Zhang, H., 2016. a study of strategic interactions of inter-regional environmental regulation - an explanation of the universality of non-complete enforcement of environmental regulation [J]. China Industrial Economy (7): 74-90.

[17]. Li Zhe, Wang Wenhan, 2021. “Can the environmental responsibility performance of ”more words and fewer deeds“ affect the bank's access to credit: A textual analysis based on the dimensions of ‘words’ and ”deeds" [J]. A textual analysis based on the two dimensions of “words” and “deeds” [J]. Financial Research (12): 116-132.

[18]. Xu, Fang-Yan, Sun, Jing-Yi & Liu, Wei. 2011 A new species of the genus Pseudourostyla (Hymenoptera, Braconidae) from China. (2025). The impact of environmental information disclosure on outward foreign direct investment: empirical evidence from Chinese listed companies. International Economic and Trade Exploration, 41(01), 69-86.

[19]. Yu Lianchao, Li Xinyi, Wang Lei, 2023. Environmental standards soft connectivity and firms' outward foreign direct investment: a research perspective from international environmental certification [J]. Research on World Economy (3): 61-73.

[20]. Kretschmer T, Leiponen A, Schilling M, Vasudeva G. Platform ecosystems as meta-organizations: Implications for platform strategies. Strat Mgmt J. 2022; 43: 405–424.

[21]. Hu, P., Li, X., Li, N., Wang, Y., & Wang, D. D. (2024). Peeking into Corporate Greenwashing through the Readability of ESG Disclosures. Sustainability, 16(6), 2571.

[22]. Tang, Q. & Luo, D. (2007). (2007). An empirical study of government subsidy motives and their effects: Empirical evidence from Chinese listed companies. Financial Studies, (06), 149-163.

Cite this article

Liu,Q. (2025). The Impact of Corporate "Greenwashing" Behavior on Corporate Outward Foreign Direct Investment. Advances in Economics, Management and Political Sciences,205,77-88.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

About volume

Volume title: Proceedings of ICEMGD 2025 Symposium: The 4th International Conference on Applied Economics and Policy Studies

ISBN: 978-1-80590-293-5(Print) / 978-1-80590-294-2(Online)
Editor: Florian Marcel Nuţă Nuţă, Xuezheng Qin
Conference website: https://www.icemgd.org/
Conference date: 20 September 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.205
ISSN: 2754-1169(Print) / 2754-1177(Online)

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