Corporate greenhushing and stock price crash risk: evidence from China

As sustainability gains momentum, there is a growing expectation for companies to enhance their environmental disclosures. However, a contrasting trend has emerged: corporate greenhushing. This phenomenon entails companies implementing emission reduction strategies without actively publicizing their environmental efforts. In this paper, we constructed a corporate greenhushing database using text analysis and analyzed heavily polluting Chinese A-share listed companies from 2011 to 2021. Our research found that corporate greenhushing effectively reduces stock price crash risk. Specifically, both the degree and tendency of greenhushing can restrain stock price crash risk by increasing market attention and reducing agency costs. In our further analysis, we included business environment uncertainty and environmental policy uncertainty in our framework and found that companies are more likely to adopt greenhushing strategies in high uncertainty environments, which reduces stock price crash risk. Our study does not imply that reducing environmental disclosures is a positive behavior. Instead, it reveals corporate greenhushing represents the equilibrium point between environmental consciousness and economic interests for companies. Our study contributes to furthering related research, aiding policymakers in understanding corporate greenhushing from the perspective of companies, and offering empirical evidence and a theoretical foundation for refining environmental disclosure policies.