Association Between Confucian Culture and Corporate Environmental Governance

ABSTRACT As the global ecological environment continues to deteriorate and natural disasters become increasingly frequent, environmental protection and sustainable development have emerged as critical global concerns. This study examined the association between Confucian culture, an informal institution, and corporate environmental governance, utilising data from A‐share listed firms in China from 2008 to 2021. Through multivariate regression analysis, the study revealed that firms deeply ingrained with Confucian core values, such as ‘benevolence’ and ‘righteousness,’ demonstrated a more proactive stance towards environmental governance. The investigation also considered the moderating effects of industry competition, openness to international influences, and government environmental subsidies. Findings indicated that intense industry competition and high levels of openness may dilute the beneficial effects of Confucian culture on environmental governance. Conversely, government environmental subsidies were found to align with Confucian values, thereby enhancing corporate commitments to environmental stewardship. This study conducted robustness checks to verify the reliability of the data and used instrumental variable techniques to mitigate potential endogeneity issues. The results underscored the significant role of Confucian culture in fostering corporate environmental governance and advocated for an integrated approach where formal and informal institutions work in concert to bolster environmental management practices.