Does Social Media Pressure Induce Corporate Hypocrisy? Evidence of ESG Greenwashing from China

Hypocrisy in corporate social responsibility has attracted increasing attention from scholars. Under the context of the digital era, we examine whether and how social media pressure affects the typical corporate hypocrisy of ESG greenwashing. Using a dataset of A-share listed firms in China from 2011 to 2021, we find that negative sentiment from stock message boards induces firms to engage in ESG greenwashing. Our results are confirmed by an array of robustness tests and additional tests. In addition, the impact of social media pressure is more pronounced in firms with lower market value and poorer reputation. The channel tests show that social media pressure induces ESG greenwashing by exacerbating managerial myopia. Finally, we further find that the shareholding of institutional investors, high-quality audit and local environmental regulation can alleviate this negative impact. Overall, our study demonstrates the mechanism underlying social media pressure on ESG greenwashing and provides practical suggestions for improving the construction of the ESG system.