China's economic development model is shifting from a high-growth, resource-intensive approach to a more sustainable, high-quality development model. This transition is crucial given the environmental challenges associated with rapid growth. High-quality development is a key strategic focus for China's modernization, and it relies heavily on the high-quality development of individual firms. While existing research has examined the positive factors influencing corporate high-quality development, there is a lack of exploration of negative informal institutional factors. This study addresses this gap by investigating the impact of speculative culture – a societal mindset prioritizing short-term gains and high-risk investments – on corporate high-quality development in China. The authors hypothesize that speculative culture impedes high-quality development, but acknowledge the possibility of a positive effect due to enhanced market adaptation and responsiveness. The study uses Chinese A-share listed companies as its sample, employing per capita lottery sales and number of mahjong parlors as proxies for speculative culture and TFP as a measure of high-quality development.

The literature review covers two main areas: corporate high-quality development and speculative culture. Regarding high-quality development, prior research has focused on firm characteristics (e.g., CSR, financing constraints) and formal institutions (e.g., government supervision). However, the role of informal institutions has been largely neglected. The review highlights the existing literature examining the impact of formal institutions and firm characteristics on corporate high-quality development in China, noting a gap in the study of informal institutional impacts. The literature on speculative culture reveals its multifaceted impact, showing both positive (market dynamism, resource allocation efficiency) and negative (market volatility, financial risks) consequences. The review discusses the contrast between the traditional Confucian emphasis on stability and long-term planning and the emerging speculative culture emphasizing short-term gains. It also examines prior research linking speculative culture to investment behavior, corporate governance, performance, and stock prices, but notes a lack of research focusing specifically on its relationship with corporate high-quality development.

The study uses data from Chinese A-share listed companies (2010-2019), excluding ST, PT, financial, and real estate firms. Financial and firm-level data comes from the CSMAR database, while regional data (GDP, population, lottery sales) are sourced from the National Bureau of Statistics. The study uses per capita lottery sales as the primary measure of speculative culture, with the number of mahjong parlors serving as an alternative measure. Total factor productivity (TFP), calculated using the LP and OP semi-parametric methods, serves as a proxy for corporate high-quality development. The study uses a linear regression model to examine the relationship between speculative culture and TFP, controlling for various firm- and regional-level factors. To address endogeneity concerns, the impact of natural disasters is used as an instrumental variable. Further analysis explores the mediating role of corporate innovation (measured by patent count) and heterogeneity based on firm size and analyst attention.

The benchmark regression results show a significant negative correlation between speculative culture and TFP, supporting the hypothesis that speculative culture impedes corporate high-quality development. This negative relationship is robust across different TFP measurement methods (LP and OP) and alternative measures of speculative culture (lottery sales and mahjong parlors). The instrumental variable approach using natural disasters further confirms the causal relationship. The mediating effect analysis indicates that speculative culture reduces corporate innovation, which subsequently lowers TFP. Heterogeneity tests reveal that the negative impact of speculative culture is weaker in larger firms and those with higher analyst coverage. The results are consistent across various robustness checks and demonstrate that the negative correlation between speculative culture and high-quality development is not simply a spurious result of omitted variables or other econometric issues.

The findings strongly suggest a causal relationship between a prevalent speculative culture and lower corporate high-quality development in China. The negative impact operates, at least partially, through a reduction in corporate innovation. Larger firms and those with greater analyst oversight appear to be less susceptible to the negative influence of speculative culture. This suggests that strong internal governance mechanisms and external monitoring can help mitigate the adverse effects of a speculative environment. The results highlight the importance of considering informal institutional factors, like speculative culture, alongside firm-specific and formal institutional characteristics when studying high-quality development. The findings have implications for both firm-level strategies and policy interventions to promote sustainable and high-quality economic growth in China.

This study demonstrates that speculative culture significantly hinders corporate high-quality development in China, primarily by reducing innovation. The negative impact is moderated by firm size and analyst attention. Future research should focus on refining measures of speculative culture, extending the analysis to other contexts (particularly different political systems), and exploring policy interventions to mitigate the negative effects of speculative culture. A deeper investigation into the interplay between speculative culture and different aspects of corporate management, innovation, and sustainability would also be beneficial.

The study's limitations include the use of provincial-level data to measure speculative culture, which may mask variations within provinces. The focus on China may limit the generalizability of the findings to other countries with different institutional environments. Future research should consider more granular measures of speculative culture and investigate the cross-country validity of the findings. Examining the impact of specific policy interventions designed to curb speculative behavior would also strengthen the study's implications.