Corporate integrity culture on environmental, social, and governance (ESG) performance

Abstract

AbstractRecent research has viewed desirable environmental performance as the proxy of corporate integrity culture. Based on the stakeholder theory, we extend this literature by examining whether the corporate integrity culture is associated with environmental, social, and governance (ESG) performance among China A‐listed firms. We first build the integrity culture dictionary by the word embedding model. We also absorb the social influence into the integrity dictionary and identify corporate integrity culture through textual analysis. The results show that corporate integrity culture is positively associated with ESG performance. This research further discloses that this relationship is from both an indirect of integrity on green innovation and a direct effect of integrity in signaling internal stakeholders' behavioral integrity and verifying integrity culture to external stakeholders. Overall, the empirical evidence further enriches our understanding of the relationship between ESG performance and corporate integrity culture in China.