A cross‐cultural study of ESG impact on corporate performance and equity

Abstract Utilising A‐share corporate data and quantitative and empirical methodologies, this study examines the potential influence of environmental, social, and governance (ESG) and Confucianism on two critical dimensions of corporate governance: corporate profitability and equity in compensation. The findings indicate that while ESG practices contribute to enhanced profitability, they are also associated with an increased disparity in fair pay, indicating more pronounced salary variations. Significantly, the incorporation of Confucian principles appears to moderate these disparities, aligning ESG efforts more closely with principles of equitable compensation. This research analyses the interplay between contemporary sustainability initiatives and traditional cultural norms, offering valuable insights for the formulation of balanced corporate management strategies.