Does corporate greenwashing affect investors' decisions?

Greenwashing creates a misleadingly positive image for corporations while leading to the misguidance of investors' behaviors. Based on the sample of Chinese A-share listed companies for the period 2008-2021, this paper investigates the impact of corporate greenwashing on investors' decisions. The empirical results indicate that (i) greenwashing significantly improves short-term returns on corporate stocks, but reduces long-term returns; (ii) in the short term, investors are influenced by expressive manipulation rather than selective disclosure, but this impact is not sustainable, and both have an impact in the long term. These findings provide a new risk reminder for investors' behaviors and have practical significance for government to promote the green development of corporations.