<p>Common institutional ownership occurs when the same institutional investor holds significant stakes in multiple competing companies within the same industry or market. This shared ownership can influence corporate behavior by either aligning or conflicting with managerial incentives, potentially fostering collaborative governance or collusive practices. Drawing on principal-agent theory, institutional theory, and the organizational economics view of governance structure adaptiveness, this study examines how different types of common institutional ownership affect corporate greenwashing. Using a sample of Chinese A-share listed firms from 2011 to 2024, we find that long-term common institutional ownership significantly suppresses greenwashing, whereas short-term common institutional ownership significantly exacerbates it. Financing constraints and managerial myopia are two of the key mediating mechanisms. Long-term shared ownership appears to alleviate financing constraints and reduce managerial short-sightedness, which in turn suppresses greenwashing. Conversely, short-term shared ownership intensifies these issues, promoting greenwashing. Further heterogeneity analyses indicate that the constraining effect of long-term common institutional ownership is more pronounced in non-state-owned enterprises (non-SOEs) and firms with weak internal controls, whereas the promoting effect of short-term common institutional ownership is mainly concentrated in firms with weak internal controls. In addition, net-effect tests show that when both types of common owners coexist within the same firm, the governance effect of long-term common institutional ownership exerts a stronger overall influence on greenwashing. By distinguishing between long-term and short-term common institutional investors, this study provides more nuanced evidence on the governance consequences of common ownership and offers practical implications for improving green governance and promoting sustainable development.</p>