How Does Informal Institution Influence Corporate ESG Greenwashing? - from the Perspective of Confucian Culture

Confucian culture, as a traditional culture with profound influence in East Asia, has drawn increasing attention due to its impact on corporate governance. Investigating how Confucian culture influences corporate ESG (Environmental, Social, and Governance) greenwashing is significant. Using data from 9,356 company-year observations between 2012 and 2022, this paper examines the impact mechanism of Confucian culture on ESG greenwashing from the perspective of non-financial information greenwashing. The results show that Confucian culture deters corporate ESG greenwashing. It influences ESG reporting through its effect on corporate behavior and the broader social environment. In privately-owned enterprises, Confucian culture significantly inhibits ESG greenwashing. Additionally, it plays a larger role in non-coastal regions. Mechanism analysis reveals that Confucian culture negatively influences ESG greenwashing by promoting environmental certifications and reducing earnings management. These findings highlight the importance of inheriting and promoting Confucian culture in contemporary society.