The impact of bond market liberalisation on corporate environmental greenwashing: empirical evidence from China

Using the 2017 launch of China’s “Bond Connect” as a quasi-natural experiment, this study applies a difference-in-differences (DID) model to a sample of A-share listed companies over the period 2009-2024 to examine the causal impact of bond market liberalisation on corporate environmental greenwashing. Baseline results show that liberalisation significantly reduces environmental greenwashing. The finding remains robust to PSM, entropy balancing, placebo tests, and other robustness checks. Moreover, liberalisation operates through two primary channels. First, it strengthens external monitoring by attracting foreign investors and increasing media coverage. Second, it mitigates financing constraints by improving capital availability. Heterogeneity analysis shows this governance effect is more pronounced in firms with weaker internal controls, higher AI adoption, and larger bond issuance volumes. This research extends the corporate finance literature on capital market internationalisation. It also provides empirical evidence that financial opening can support substantive corporate green transitions in emerging markets.