Does Culture Mitigate Court Conflicts?

Abstract

This study investigates how culture influences court decisions, with a focus on corporate cases in China. Our results illustrate that courts located in regions with higher exposures to Confucian values significantly settle the resolution of legal disputes between corporate entities. Empirical analyzes further demonstrate that factors such as cultural disparity, judicial demeanor, and oversight mechanisms exert pronounced influences on observed harmonizing effects. Consequently, firms that experience fewer legal disputes benefit from capital market valuations and exhibit greater engagement in corporate social responsibility initiatives. In general, aligning with existing cultural and legal frameworks, we justify culture can reduce court conflicts and suggest a potential for policy makers to achieve societal harmony through the integration of cultural influences.

Keywords: Culture, Confucianism, Legal Disputes, Corporate Governance JEL Classification: K41

JEL Classification: K41, N45, G30