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Abstract
This study examines whether financial constraints and CEO compensation structures influence corporate greenwashing as a strategy for preserving legitimacy and securing external financing. Utilizing the Difference Generalized Method of Moments estimator on a sample of firms from emerging Asian economies over the 2013–2023 period, the empirical results reveal that financial constraints significantly exacerbate greenwashing. Furthermore, CEO compensation exhibits an inverted U-shaped non-linear relationship with this behavior. These findings contribute to the extant literature by integrating agency theory and upper echelons theory. Additionally, they imply that policymakers and investors should strengthen ESG oversight mechanisms and design optimal executive compensation schemes to mitigate corporate greenwashing.