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ESG rating disagreement and corporate digital transformation

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  • Ren, Hao

Abstract

Despite the increasing focus on environmental, social, and governance (ESG) factors, discrepancies in ratings are weighing on a company's stakeholders. Based on the hypothesis of information asymmetry, this study uses Chinese A-share listed companies from 2010 to 2023 to examine how ESG rating disagreement impacts corporate digital transformation (CDT). Empirical results show that ESG rating discrepancy is associated with lower CDT, with technical innovation and financing constraints being the two mechanisms. When testing alternative approaches, including the alternative of CDT, propensity scoring matching and Heckman's two-stage model, the findings remain robust. The findings have policy implications for encouraging companies to disclose their ESG information in the context of digital economy.

Suggested Citation

  • Ren, Hao, 2025. "ESG rating disagreement and corporate digital transformation," Finance Research Letters, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325001679
    DOI: 10.1016/j.frl.2025.106903
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    References listed on IDEAS

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    Cited by:

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    2. Zizhe Du & Chao Chen, 2025. "AI vs. ESG? Uncovering a Bidirectional Struggle in China’s Sustainable Finance," Sustainability, MDPI, vol. 17(9), pages 1-23, May.
    3. Sahu, Asis Kumar & Debata, Byomakesh & Dash, Saumya Ranjan, 2025. "Managerial sentiment, macroeconomic uncertainty, and stock liquidity: Evidence from India," Finance Research Letters, Elsevier, vol. 85(PA).

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    Keywords

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    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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