Abstract

In the practice of sustainable development, greenwashing has garnered increasing attention in both academic and corporate realms. Although various studies have examined corporate behavior in this context, the role of disciplinary effects—mechanisms that impose constraints and punitive measures on companies due to loss of interests, such as fines, reputational damage, or management changes—remains underexplored. This study investigates the relationship between greenwashing and disciplinary effects, with a particular focus on corporate liquidity, defined as a company's ability to convert assets into cash to meet its short-term obligations. Analyzing data from 165 companies across the N-11 countries from emerging markets, our findings reveal a negative relationship between greenwashing and disciplinary effects, indicating that higher levels of greenwashing are associated with weaker disciplinary mechanisms. Furthermore, this study confirms that corporate liquidity significantly moderates this relationship, with its impact varying based on the liquidity levels and the degree of greenwashing. These findings contribute to the existing body of research on greenwashing and offer valuable insights to regulatory agencies and policymakers.