This study aims to examine the effects of capital market internationalization on reducing greenwashing in ESG performance, while exploring the mediating role of green technological innovation and the moderating role of executives with international experience.
Using the inclusion of China’s A-shares in the MSCI Emerging Markets index as a quasi-natural experiment, this research applies a staggered difference-in-differences model to examine the relationship between capital market internationalization and greenwashing in ESG performance. The analysis is based on a dataset comprising 6,585 observations from 2013 to 2022. Control variables incorporated in the model include return on assets, Tobin’s Q, debt repayment capacity, the shareholding percentage of the largest shareholder, board size, and corporate ownership structure.
The research identifies a statistically significant reduction of 11.75% in ESG greenwashing, which is attributed to the internationalization of capital markets. Furthermore, the negative impact of capital market internationalization on greenwashing is partially mediated by advancements in green technological innovation. Additionally, the findings indicate that executives with international experience enhance the beneficial effects of capital market internationalization on green technological innovation.
This study elucidates the role of capital market internationalization in mitigating ESG greenwashing of Chinese listed companies, thereby expanding the applications of Information Asymmetry Theory, Stakeholder Theory, and Institutional Theory in the context of emerging markets. Furthermore, the findings underscore the significance of green technological innovation and the presence of executives with international experience, offering valuable practical implications for reducing corporate greenwashing and advancing sustainable development.
