Year: 2026
Type: article
Abstract: ABSTRACT This paper studies whether local informal environmental regulation can limit corporate ESG inconsistency, understood as the gap between what firms disclose about ESG and how they actually perform. Although ESG credibility has attracted growing scholarly attention, evidence remains limited on how community‐based supervision restrains the separation between symbolic disclosure and substantive action. Using Chinese A‐share listed firms from 2010 to 2022, this study finds that stronger local informal regulation is accompanied by a narrower ESG inconsistency gap. The channel tests provide evidence consistent with public attention and pollution‐control investment as potential transmission channels, but do not provide support for the environmental textual emphasis channel. Additional analyses show that the disciplining role of informal regulation depends on the surrounding governance setting: formal enforcement, capital‐market pressure, internal governance arrangements, and negative investor sentiment may dilute the role of social supervision. These findings highlight the macro‐level value of informal environmental regulation in emerging markets. Rather than serving only as a background institutional condition, informal regulation connects public environmental concern, local state response, and corporate ESG accountability. The study contributes to sustainable development and ESG governance research by showing how non‐state pressure can help curb symbolic‐substantive decoupling and strengthen the credibility of corporate sustainability practices.
DOI: 10.1111/beer.70159
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W7225661552