Monitoring or collusion: The impact of institutional investors' site visits on corporate greenwashing

Corporate site visits provide institutional investors with a distinctive channel to gain first-hand insights into firms' operations through direct observation and interaction. This study investigates whether such visits constrain or facilitate corporate greenwashing in China. Results show that institutional investors' site visits significantly reduce greenwashing, supporting the monitoring hypothesis. We further identify the boundary conditions that shape this effect. The deterrent role of site visits is stronger when firms are led by executives with environmental experiences and when external environmental regulation is stricter, but it weakens under greater financial constraints. By differentiating “ask” and “act”, we also show that institutional investors' green attention and green money are both effective in mitigating corporate greenwashing. Additional analysis indicates that long-term investors, more extensive communication, and active participation of key executives strengthen the influence of site visits on corporate greenwashing. By integrating managerial characteristics and diverse investor behaviors, this research advances our understanding of how institutional monitoring shapes corporate sustainability practices.