Business strategy and environmental information disclosure from a Confucian cultural perspective: Evidence from China

Abstract

Based on social contract theory, this study investigates the impact of business strategy on environmental information disclosure from an informal institutional perspective. Using empirical data from a panel of Chinese listed A‐share firms in Shanghai and Shenzhen from 2010 to 2020, we demonstrate that firms following prospector strategies have higher levels of environmental information disclosure compared to those following defender strategies. Our findings also reveal that Confucian culture positively moderates the relationship between business strategy and environmental information disclosure. Specifically, we find that when environmental uncertainty increases, the moderating effect of Confucian culture weakens, while effective legal supervision strengthens the positive moderating effect of Confucian culture. Additionally, our results show that business strategy affects environmental information disclosure through the dual channels of economic benefits contract and social recognition contract. Overall, this research provides valuable insights for corporate sustainable development and effective government environmental governance.