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The Impact of Confucian Culture on Corporate Environmental Governance

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  • Xiancong Wu
  • Meng Hao
  • Di Wu
  • Richard Skolnik

Abstract

Using A-share listed companies in Shanghai and Shenzhen from 2010 to 2019 and the density of Confucian temples and schools near sample company headquarters, this paper uses regression analysis to estimate the impact of Confucian culture on corporate environmental governance. Enterprise environmental capital investment as a percent of total assets is the dependent variable used as a proxy for environmental governance. The log of the number of the number of Confucian temples and Confucian academies within a 200-kilometer radius of the company's registered location plus one is the independent variable. This study finds that the environmental capital expenditures increase by 0.007% for every unit increase in the independent variable. Similar results are found when the radius is expanded to 300 kilometers. The greater the influence of Confucian culture is, the more inclined enterprises are to participate in corporate environmental governance. Additionally, environmental governance information disclosure can be a key influence path for this correlation. Further analysis finds that the relationship between Confucian culture and environmental governance is stronger with more experienced managers, a more developed institutional environment, and after 2015 following the People's Republic of China’s enactment of the Environmental Protection Law. This study expands the literature on the factors that influence Confucian culture on corporate environmental governance, enriches the empirical evidence of the influence of the informal system of corporate environmental governance on enterprise decision-making, and confirms the modern commercial value of Confucian culture.Â

Suggested Citation

  • Xiancong Wu & Meng Hao & Di Wu & Richard Skolnik, 2024. "The Impact of Confucian Culture on Corporate Environmental Governance," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 13(2), pages 14-28, June.
    • Handle: RePEc:rbs:ijfbss:v:13:y:2024:i:2:id:3427
    DOI: 10.20525/ijfbs.v13i2.3427
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    References listed on IDEAS

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    1. Xingqiang Du, 2015. "Does Confucianism Reduce Minority Shareholder Expropriation? Evidence from China," Journal of Business Ethics, Springer, vol. 132(4), pages 661-716, December.
    2. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
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