Abstract/Summary

Purpose This paper investigates the impact of AI penetration rate on the degree of corporate greenwashing, and aims to assess the potential of AI in enhancing firms' environmental performance and reducing false disclosures. Design/methodology/approach This study employs a year and firm fixed-effects model to analyze data from Chinese listed firms from 2012 to 2022. We use the low-carbon city pilot as a quasi-natural experiment to address endogeneity concerns and conduct a series of robustness tests, including adding control variables and transforming the model. Findings The results of this paper show that the application of AI can inhibit firms' greenwashing behavior, with green innovation activities further enhancing this inhibitory effect. In state-owned firms and those with Party organizations, the inhibitory effect of AI on corporate greenwashing is more significant. This reduction in greenwashing is more likely to be observed in firms that are heavily influenced by Confucian culture, receive higher public attention regarding their environmental impact, face less market competition, suffer from more serious pollution, and face less financial constraints. Originality/value We propose a new research perspective that offers novel insights into promoting the green development of firms by revealing the potential of AI in reducing their greenwashing behavior. Corporate managers can explore specific strategies for applying AI to monitor, prevent, and correct greenwashing, thereby enhancing corporate environmental performance and social responsibility.