Rating chaos and green governance: ESG rating divergence, corporate greenwashing, and the governance effects of environmental tax reform

ESG rating divergence (ESGDIS) may distort market signals and thereby intensify corporate greenwashing (GW), yet this relationship has received limited empirical attention. Drawing on the Noise Trading Theory, Catering Theory and Pigouvian Tax Theory, this study constructs a systematic analytical framework through cross-theoretical integration to analyze the impact of ESGDIS on GW and the governance role of Environmental Tax Reform (ETR) in this relationship. Based on a sample of Chinese A-share listed companies, the findings show that ESGDIS positively affects GW by exacerbating information asymmetry, elevating corporate risk-taking, and inhibiting green innovation. Heterogeneity analysis further reveals that this effect is more pronounced for firms with weak market competitiveness, operating in regions with low environmental regulation intensity, and subject to high financing constraints. Additionally, we identify ETR as an effective measure that mitigates GW by reducing ESGDIS. Overall, our findings contribute to the ongoing research on the determinants of greenwashing and the economic consequences of ESGDIS, and highlight the critical role of environmental regulation in curbing greenwashing in emerging markets.