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<p>Within the framework of China’s “dual-carbon” goals, corporate emission reduction represents a core aspect of high-quality economic development and plays a critical role in realizing these targets. However, under increasing regulatory scrutiny and public expectations regarding environmental performance, some firms engage in “greenwashing” practices. Using manually collected environmental disclosure data from Chinese A-share listed firms in heavily polluting industries over the period 2013–2022, this study examines the effect of corporate greenwashing on audit quality and explores the underlying mediating mechanisms. The results are as follows: (1) Greenwashing intensity is significantly negatively associated with audit quality; (2) Mechanism analysis indicates that enterprise greenwashing behavior undermines audit quality by increasing significant misstatement risk and reducing audit input; (3) Further analysis shows that a higher level of internal control mitigates the adverse effect of greenwashing on audit quality; (4) Heterogeneity analyses indicate that the adverse effect of greenwashing on audit quality is notably strong for smaller firms, privately owned companies, and audits conducted by lower-reputation accounting firms; by contrast, higher auditor industry expertise mitigates this detrimental effect. The conclusions remain robust after a series of robustness checks, including the robustness test of the two-stage regression method of instrumental variables, replacement of explanatory variables, a period lag of explanatory variables, and change the window period. This study enriches research on corporate greenwashing’s impact on market intermediaries and offers insights into the role of non-financial information in capital markets, supporting policies for energy conservation and emission reduction.</p>

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Does corporate greenwashing affect audit quality? Evidence from China's heavily polluting industries

  • 期刊论文

  • 发表日期：

    2026年3月3日

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  • Liping Wang,
  • Zhonghao Ye,
  • Yanqiong Chen,
  • Chuang Li

摘要

Within the framework of China’s “dual-carbon” goals, corporate emission reduction represents a core aspect of high-quality economic development and plays a critical role in realizing these targets. However, under increasing regulatory scrutiny and public expectations regarding environmental performance, some firms engage in “greenwashing” practices. Using manually collected environmental disclosure data from Chinese A-share listed firms in heavily polluting industries over the period 2013–2022, this study examines the effect of corporate greenwashing on audit quality and explores the underlying mediating mechanisms. The results are as follows: (1) Greenwashing intensity is significantly negatively associated with audit quality; (2) Mechanism analysis indicates that enterprise greenwashing behavior undermines audit quality by increasing significant misstatement risk and reducing audit input; (3) Further analysis shows that a higher level of internal control mitigates the adverse effect of greenwashing on audit quality; (4) Heterogeneity analyses indicate that the adverse effect of greenwashing on audit quality is notably strong for smaller firms, privately owned companies, and audits conducted by lower-reputation accounting firms; by contrast, higher auditor industry expertise mitigates this detrimental effect. The conclusions remain robust after a series of robustness checks, including the robustness test of the two-stage regression method of instrumental variables, replacement of explanatory variables, a period lag of explanatory variables, and change the window period. This study enriches research on corporate greenwashing’s impact on market intermediaries and offers insights into the role of non-financial information in capital markets, supporting policies for energy conservation and emission reduction.