Abstract
Under the digital economy background and “dual-carbon” goals, digital transformation is a critical approach for companies to reach a high-quality development. This study analyzes the relationship between digital transformation and corporate Environmental, Social, and Governance (ESG) performance, using digital transformation decision-making data extracted via Python text analysis. A fixed-effects model is utilized to examine if there is a postive effect between corporate digital transformation and ESG performance with panel data from China’s A-share listed companies from 2013 to 2021, including its mechanisms and pathways. Although a few research have revealed the active relationship in this field, the validity of data source is from Bloomberg more, but less from Huazheng database which is specialised for Chinese enterprises. The research yields the following findings: Firstly, digital transformation in listed companies significantly enhances ESG performance and the conclusions remain valid after conducting robust tests including variable substitution. Secondly, digital transformation enhances corporate ESG performance by easing financing constraints and boosting innovation capabilities. Thirdly, state-owned enterprise and large corporations both exert positive pronounced effects. These findings are conducive for managers to better decision-making.
References
Wang H, Jiao S, Bu K, et al., 2023, Digital Transformation and Manufacturing Companies’ ESG Responsibility Performance. Finance Research Letters, 2023(58): 104370.
Ayton J, Krasnikova N, Malki I, 2022, Corporate Social Performance and Financial Risk: Further Empirical Evidence using Higher Frequency Data. International Review of Financial Analysis, 2022(80) : 102030.
Zhang J, Yu H, Zhao J, et al., 2025, How Does Corporate Digital Transformation Affect Green Innovation? Evidence from China’s Enterprise Data. Energy Economics, 2025(142): 108217–108217.
Wen H, Zhong Q, Lee C, 2022, Digitalization, Competition Strategy and Corporate Innovation: Evidence from Chinese Manufacturing Listed Companies. International Review of Financial Analysis, 2022(82): 102166.
Lin L, Tjio H, 2020, Alternative Investments, Sustainability in the Digital Age. Eur Bus Org Law Rev, 2020(21): 1–5.
Lin Y, Lu Z, Wang Y, 2023, The Impact of Environmental, Social, and Governance (ESG) Practices on Investment Efficiency in China: Does Digital Transformation Matter? Research in International Business and Finance, 2023(66): 102050.
Zhong Y, Zhao H, Yin T, 2023, Resource Bundling: How Does Enterprise Digital Transformation Affect Enterprise ESG Development? Sustainability, 15(2): 1319.
Li Y, Zheng Y, Li X, et al., 2024, The Impact of Digital Transformation on ESG Performance. International Review of Economics and Finance, 96(PB): 103686–103686.
Zhang W, Zhang S, Chen F, et al., 2023, Does Chinese Companies’ OFDI Enhance Their Own Green Technology Innovation? Finance Research Letters, 2023(56): 104113.
Ding J, Li L, Zhao J, 2024, How Does Fintech Prompt Corporations Toward ESG Sustainable Development? Evidence from China. Energy Economics, 2024(131): 107387.
Yang P, Hao X, Wang L, et al., 2024, Moving Toward Sustainable Development: The Influence of Digital Transformation on Corporate ESG Performance. Kybernetes, 53(2) : 669–687.
Wu F, Hu H, Lin H, 2021, Corporate Digital Transformation and Capital Market Performance-Empirical Evidence from Stock Liquidity. Manag. World, 37(7): 130–144.