Misinformation in Sustainability Reporting: How does Greenwashing Undermine Innovation Resilience?
Author:Junlin He, Yuanfang Chen, Wee-Yeap Lau, Kok-Haur Ng, and Lóránt Dénes Dávid
JEL:G34, O31, Q56.
DOI:10.24818/EA/2026/73/1229
Keywords:Greenwashing, innovation resilience, institutional investors, government subsidies.
Abstract:
As sustainable development pressures escalate, stakeholders increasingly prioritise sustained corporate innovation resilience. However, these pressures also incentivise firms to adopt symbolic greenwashing tactics to mislead stakeholders, while the existing literature has paid limited attention to how such deceptive practices erode firms’ innovation capabilities. This study examines the impact of corporate greenwashing on innovation resilience using a panel dataset of 5,183 Chinese listed firms from 2015 to 2024. We find a significant negative relationship between corporate greenwashing and innovation resilience, suggesting that symbolic environmental management does not generate the technological depth required to withstand external shocks. Mechanism analysis indicates that this adverse effect operates through increased negative media coverage and reduced research and development expenditure, which jointly undermine corporate reputation and heighten structural rigidity. Further evidence shows that external institutional investors mitigate this negative relationship by strengthening monitoring and information verification, whereas government subsidies exacerbate it by creating soft budget constraints and fostering organisational inertia. The findings extend the literature by showing that innovation resilience depends not only on substantive technological investment and capability building, but also on limiting symbolic environmental communication that misallocates resources and weakens external support.