This study examines the nonlinear relationship between board size and Environmental, Social, and Governance (ESG) greenwashing and explores how board diversity moderates this association. Using panel data from Chinese A-share listed firms between 2009 and 2023, we employ quadratic fixed-effects regression models to test for an inverted U-shaped relationship. The results indicate that medium-sized boards (10–13 directors) exhibit the highest propensity for greenwashing. Further analyses reveal heterogeneous moderating effects across four dimensions of board diversity—gender, functional background, nationality, and age. Specifically, reaching a critical mass of at least two female directors or increasing functional diversity strengthens the inverted U-shaped relationship, whereas greater age or nationality diversity attenuates it. Drawing on fraud triangle theory, this study uncovers a previously overlooked nonlinear mechanism underlying board size and ESG greenwashing. Moreover, it identifies two distinct diversity-driven pathways: resource-based mechanisms (gender and functional diversity) and supervision-based mechanisms (nationality diversity). These findings extend existing literature on board governance and greenwashing and provide practical insights, suggesting that firms should avoid the “danger zone” associated with medium-sized boards and adopt targeted diversity strategies to mitigate ESG greenwashing risks.
Yu et al. (Fri,) studied this question.
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