Clan culture and corporate ESG performance

This study investigates the influence of clan culture, as an informal institution, on corporate environmental, social, and governance (ESG) performance in China. Utilizing a sample of 4025 A-share listed companies from 2010 to 2020, the analysis employs ordinary least squares regressions with instrumental variables to address endogeneity concerns, alongside mediation and heterogeneity tests. The findings reveal that stronger clan culture significantly enhances overall ESG performance, with positive effects on environmental (E) and social (S) ratings, but no significant impact on governance (G) ratings. Mechanism analyses indicate that clan culture improves ESG outcomes by boosting regional trust and mitigating principal-agent problems, with stronger effects observed in regions with weak formal institutions. These results imply that policymakers in transitioning economies should leverage informal institutions like clan culture to complement formal regulations, such as by integrating cultural networks into region-specific ESG promotion strategies for sustainable corporate development.