Corporate strategic greenwashing under ESG disclosure uncertainty: Financing incentives and nonlinear effects

As ESG investing becomes increasingly normalized, there is heightened scrutiny on whether companies partake in strategic greenwashing by capitalizing on the ambiguity of ESG disclosures. Drawing on signaling theory and the financing pricing behavior of risk-averse creditors, this study develops a micro-level theoretical model within a game-theoretic framework to explain the incentives for firms to adopt greenwashing behavior (GW) under ambiguous ESG signals. The theoretical analysis suggests that moderate information asymmetry may help reduce financing costs and generate implicit financing dividends, whereas excessive GW may result in regulatory penalties and reputational risks. Based on this framework, the study constructs a firm-level ESG disclosure uncertainty (ESGU) index and conducts an empirical analysis using data from A-share listed companies in China (from 2009 to 2022). The results show that greater ESGU increases the likelihood of firms engaging in GW-emphasizing green narratives while obscuring actual environmental performance. Further analyses reveal that firms with higher debt financing costs, greater information asymmetry, and stronger resource dependence are more likely to leverage ESG signal ambiguity to "appear green." Heterogeneity signifies that audit quality and financial pressure substantially influence the intensity of ESGU on GW. Moreover, GW is found to significantly alleviate firms' financing constraints. A nonlinear relationship is also identified between ESGU and financing constraints, indicating the existence of a marginal "fuzzy arbitrage" window. This work offers theoretical and empirical evidence for the economic rationale linking ESG disclosure ambiguity to GW, thereby enhancing the literature on green signaling, strategic compliance, and sustainable finance. The results provide actionable insights for enhancing ESG governance in financial markets and promoting high-quality, sustainable development.