Corporate culture as a catalyst for ESG disclosure: empirical evidence from the United States

Abstract

Purpose: The purpose of this study is to examine the role of informal governance mechanisms, specifically corporate culture, in enhancing Environmental, Social and Governance (ESG) transparency. This study investigates whether strong cultural values can complement or substitute for formal regulatory frameworks in driving higher ESG disclosure. Design/methodology/approach: Using this 20-year panel data set (2001–2021), which includes a firm-year corporate culture index based on five key values, including innovation, integrity, quality, respect and teamwork, this study examines the relationship between corporate culture and ESG disclosure scores. The analysis uses panel regression, supported by instrumental variable estimation, propensity score matching, placebo tests and a series of robustness checks. Findings: Firms with stronger corporate cultures exhibit significantly higher ESG disclosure scores. This positive relationship is robust to endogeneity concerns and alternative specifications. Further analysis shows that the effect of culture is attenuated in stringent regulatory environments but strengthened under conditions of high market competition. Originality/value: This study contributes to the ESG literature by empirically establishing corporate culture as an effective informal governance mechanism that can partially substitute for formal regulation in promoting transparency. This further highlights the contingent role of institutional and market contexts, offering practical insights for regulators and firms aiming to improve ESG disclosure