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<p>In an era where corporate accountability and sustainability are dominant, understanding the dynamics of internal governance is crucial for fostering genuine environmental, social, and governance (ESG) practices. Therefore, this endeavor explores the impact of internal governance competence on ESG greenwashing through an empirical analysis. To this end, we collected data from the Shenzhen and Shanghai stock exchanges covering the period from 2012 to 2022. To achieve our research objectives, we first employed ordinary least squares (OLS) regression analysis. Subsequently, we applied various robustness checks, including alternative measures for both explanatory and outcome variables, addressing omitted variables, evaluating lagged effects, employing two-stage least squares (2SLS), two-stage generalized method of moments (GMM2S), quantile analyses, decision framing test, and heterogeneity analyses. This study employs three distinct proxies for internal governance competence dimensions, including experience (CEO age), diversity (female presence on the board), and opportunism (CEO duality). The empirical findings reveal that CEO age (experience) and women on the board (diversity) inhibit ESG greenwashing, while CEO duality (opportunism) improves the ESG greenwashing. These outcomes are in line with the upper echelon theory, gender socialisation theory, and agency theory. The upper-echelon perspective posits that demographic characteristics substantially influence strategic decision-making. Additionally, gender socialisation theory highlighted that women are more socialized than their counterparts. Agency theory emphasises that the separation of ownership and control induces opportunistic behavior. Moreover, we employ a series of robustness checks, and our conclusion remains robust. Furthermore, from a practical standpoint, these findings suggest that policymakers, regulatory authorities, and corporations formulate a framework for the consistency between the ESG objectives and a firm's business strategies to inhibit ESG greenwashing. The novelty of this study lies in its comprehensive approach to linking internal governance characteristics and competence with corporate hypocrisy, providing actionable insights for firms aiming to strengthen their internal governance framework.</p>

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The role of internal governance competence in mitigating ESG greenwashing: insights from emerging markets

  • 期刊论文

  • 发表日期：

    2026年1月7日

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  • Asif Ali,
  • Bilal Haider Subhani,
  • Shen Zunhuan

摘要

In an era where corporate accountability and sustainability are dominant, understanding the dynamics of internal governance is crucial for fostering genuine environmental, social, and governance (ESG) practices. Therefore, this endeavor explores the impact of internal governance competence on ESG greenwashing through an empirical analysis. To this end, we collected data from the Shenzhen and Shanghai stock exchanges covering the period from 2012 to 2022. To achieve our research objectives, we first employed ordinary least squares (OLS) regression analysis. Subsequently, we applied various robustness checks, including alternative measures for both explanatory and outcome variables, addressing omitted variables, evaluating lagged effects, employing two-stage least squares (2SLS), two-stage generalized method of moments (GMM2S), quantile analyses, decision framing test, and heterogeneity analyses. This study employs three distinct proxies for internal governance competence dimensions, including experience (CEO age), diversity (female presence on the board), and opportunism (CEO duality). The empirical findings reveal that CEO age (experience) and women on the board (diversity) inhibit ESG greenwashing, while CEO duality (opportunism) improves the ESG greenwashing. These outcomes are in line with the upper echelon theory, gender socialisation theory, and agency theory. The upper-echelon perspective posits that demographic characteristics substantially influence strategic decision-making. Additionally, gender socialisation theory highlighted that women are more socialized than their counterparts. Agency theory emphasises that the separation of ownership and control induces opportunistic behavior. Moreover, we employ a series of robustness checks, and our conclusion remains robust. Furthermore, from a practical standpoint, these findings suggest that policymakers, regulatory authorities, and corporations formulate a framework for the consistency between the ESG objectives and a firm's business strategies to inhibit ESG greenwashing. The novelty of this study lies in its comprehensive approach to linking internal governance characteristics and competence with corporate hypocrisy, providing actionable insights for firms aiming to strengthen their internal governance framework.