This study investigates how retail investor sentiment influences corporate ESG greenwashing among listed companies in China during 2011–2023, using sentiment measures derived from the Eastmoney Stock Forum. We find that positive retail sentiment significantly mitigates ESG greenwashing, whereas negative sentiment exacerbates it. Mechanism analyses indicate that institutional ownership and managerial performance pressure are key transmission channels. The more detailed roles of financing constraints, green investors, and executives' environmental backgrounds are further examined. Overall, the findings underscore the disciplining capacity of retail investors to curb ESG misrepresentation and have implications for regulatory oversight.
Liu et al. (2026) studied this question.