Endemic traditionalist culture and ESG disclosure quality: evidence from China

The influence of culture on firms is a topic of significant importance, particularly in the context of ESG (Environmental, Social, and Governance) disclosure quality. This study examines the influence of endemic traditionalist culture on ESG disclosure quality. Our findings indicate a detrimental impact of endemic traditionalist culture on ESG disclosure quality, particularly in the social and governance components. Mechanism analysis uncovers that endemic traditionalist culture influences firms' ESG disclosure quality by exacerbating regional corruption and leading to irrational industrial structures. However, we also highlight the potential for institutional investors to mitigate these negative effects and improve ESG disclosure quality. Heterogeneity analysis reveals that the impact of endemic traditionalist culture is more pronounced among non-state firms, mild pollution firms, southern firms, and firms in formally institutional underdeveloped regions.