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CEPI & ESG greenwashing: Exec. attention view

behavior. As a result, companies will reduce their ESG 4.2. Variable definition
Gws behavior to enhance their legitimacy in the face of 4.2.1. Dependent variable
inspections. The dependent variable is ESG Gws. Bloomberg
(ii) Hypothesis 1b: CEPI will inhibit firms’ ESG Gws disclosure scores were adopted to measure information
behavior. disclosure, while actual performance was assessed
Organizational slack resources enable firms to secure using ESG rating data from Shanghai Huazheng Index
the necessary means to address unforeseen challenges, Information Service Co., Ltd. Bloomberg scores are
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mitigate resistance to innovative exploration, and widely recognized as indicators reflecting the level of
enhance risk-bearing capacity. Moreover, Fs—a form information disclosure. Meanwhile, the ESG ratings,
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of slack resource operating at the financial dimension— which integrate international experience with Chinese
functions as a critical “safety buffer” for enterprises to market characteristics, cover A-share–listed companies
safeguard sustainable development. According to the and are updated quarterly, thus serving as a commonly
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attention theory, executives may devote their attention used assessment metric. After standardization, the
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to competitors’ new strategic releases, technological gap was analyzed by subtracting the disclosure score
advancements, or policy changes in the face of a complex from the actual performance score, with the specific
and shifting market environment. Concurrently, Fs calculation formula as follows:
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represents a resource at executive disposal, which can
be flexibly allocated in response to external pressures Gws =   ER , i t − dis  ER , i t − ER ER per   (I)
−

or opportunities. When confronted with inspectors, , i t   σ  σ dis per  

executives may utilize a firm’s Fs to advance its green
initiatives and safeguard corporate legitimacy. Thus, where ER is the enterprise environmental rating.
examining the deployment of Fs can effectively reflect A company’s standardized position in relation to its
the allocation of executive attention. peers under the distribution of ER disclosure scores
(iii) Hypothesis 2: The impact of CEPI on ESG Gws was measured by the first part of the equation, while
behavior can be positively modulated by Fs. its relative position under the distribution of ER actual
performance scores was measured by the second. The
4. Methodology means of the environmental disclosure and actual
performance scores are denoted by ER and ER per ,
dis
4.1. Data sources respectively, while the related standard deviations are
This study was based on the data of Chinese A-share– denoted by σdis and σper.
listed companies in Shanghai and Shenzhen. The ESG
data of the samples were sourced from Bloomberg L.P. 4.2.2. Independent variable
Database (hereinafter referred to as “Bloomberg”) and The independent variable is the inspectorate of CEPI.
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Shanghai Huazheng Index Information Service Co., Ltd. Drawing on the relevant study, this paper took the
Given that Bloomberg’s ESG scores were updated up to implementation time of CEPI in each province as
2022 during the study period, the sample period was set the dependent variable. According to the Ministry of
from 2013 to 2022, enabling an effective observation Ecology and Environment announcement of CEPI
of changes before and after the implementation of implementation timelines in each province, the inspection
the policy. The remaining micro-financial data of the year for each enterprise was identified according to its
companies were derived from the China Stock Market location. The variable Cepi was assigned a value of
and Accounting Research database. Data on CEPI were 1 for the year in which the enterprise’s province was
obtained from the Ministry of Ecology and Environment subjected to CEPI, indicating that the enterprise was
of the People’s Republic of China. With regard to the inspected in that year. For all other years, Cepi was set
initial sample, the following processing steps were to 0, indicating the absence of inspection. The impact
conducted: first, observations with missing values for of the inspector’s arrival on the sample corporate ESG
ESG Gws were excluded; second, observations with Gws was clearly distinguished in this way.
missing values for control variables were eliminated;
finally, firms designated as ST, *ST, and those in the 4.2.3 Moderator variable
financial industry were excluded. In addition, all The moderator variable is Fs. Referring to related
continuous variables were winsorized at the 1% and research, the ratio of a firm’s quick assets to its total
99% levels to mitigate the impact of extreme values. liabilities was used to measure the degree of Fs. This
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Volume 22 Issue 4 (2025) 223 doi: 10.36922/AJWEP025280219