Abstract This study examines how CEO overconfidence influences corporate greenwashing using Chinese A-share listed firms from 2009 to 2023. Drawing on the fraud triangle framework, we conceptualize managerial overconfidence as a rationalization mechanism that legitimizes symbolic environmental disclosure under regulatory pressure. Greenwashing is measured as the divergence between ESG disclosure scores and independently assessed ESG performance ratings. Using an investment-based proxy and multiple alternative measures of CEO overconfidence, we find robust evidence that overconfident CEOs significantly increase greenwashing. Mechanism analyses show that this effect operates through disclosure manipulation channels: overconfident managers engage more intensively in earnings management and increase information opacity, widening the disclosure–performance gap. The effect is mitigated by financial constraints and Big Four auditor oversight, and amplified in regions with more intensive and complex environmental regulation. Results are robust to instrumental variable estimation, selection correction, and dynamic panel models. Overall, the findings demonstrate that CEO overconfidence drives strategic ESG overcommunication rather than substantive sustainability improvements, contributing to the behavioral finance and greenwashing literature.
Yueling Luo (Mon,) studied this question.
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