Abstract
The credibility of corporate environmental disclosures has come under increasing scrutiny in recent years. This study examines how selective disclosure predicts firms’ actual environmental efforts. Utilizing a global dataset spanning from 2011 to 2023, we find that firms exhibiting more selective disclosure behaviors deliver fewer actual efforts to reduce carbon emissions both in the short and long term. Firms view selective disclosure as an impression management strategy to substitute for emission reduction efforts, with this phenomenon being more pronounced when implied abatement costs increase. However, this substitution effect diminishes with more transparent information environment and heightened compliance requirements. Furthermore, our analysis reveals that with information asymmetry, institutional investors may be deceived by corporate selective disclosure into believing that firms are indeed performing well in terms of sustainability. Overall, our findings offer new insights into the substitution between corporate “greenwashing” and genuine environmental efforts, along with the mechanisms driving this phenomenon.