IDEAS home Printed from https://ideas.repec.org/a/eee/riibaf/v66y2023ics0275531923001757.html

Does digital innovation cause better ESG performance? an empirical test of a-listed firms in China

Author

Listed:
  • Huang, Qiongyu
  • Fang, Jiali
  • Xue, Xiaolong
  • Gao, Hongming

Abstract

Digital technologies have changed the traditional innovation paradigm. We study the impact of digital innovation on corporate ESG performance using data from China’s A-share listed companies from 2011 to 2021. The results show that (1) digital innovation has a significant and positive impact on ESG performance; (2) digital innovation can improve firm performance and attract the attention of analysts, thereby improving ESG performance; (3) the positive impact of digital innovation on ESG performance is mitigated by corporate financial stability and augmented by institutional investors; and (4) the impact of digital innovation on ESG performance is more pronounced in industries which are nonmanufacturing, industrial digitization, and low-competitive, as well as in firms which are nonstate-owned or enforce executive equity incentives. This study provides a timely assessment of the sustainable value of digital innovation and enriches the research on the impacts of corporate ESG performance.

Suggested Citation

  • Huang, Qiongyu & Fang, Jiali & Xue, Xiaolong & Gao, Hongming, 2023. "Does digital innovation cause better ESG performance? an empirical test of a-listed firms in China," Research in International Business and Finance, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:riibaf:v:66:y:2023:i:c:s0275531923001757
    DOI: 10.1016/j.ribaf.2023.102049
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0275531923001757
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ribaf.2023.102049?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Martins, Henrique Castro, 2022. "Competition and ESG practices in emerging markets: Evidence from a difference-in-differences model," Finance Research Letters, Elsevier, vol. 46(PA).
    2. Gunnar Friede & Timo Busch & Alexander Bassen, 2015. "ESG and financial performance: aggregated evidence from more than 2000 empirical studies," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 5(4), pages 210-233, October.
    3. Huang, Wei & Luo, Yan & Wang, Xiaohuan & Xiao, Lifu, 2022. "Controlling shareholder pledging and corporate ESG behavior," Research in International Business and Finance, Elsevier, vol. 61(C).
    4. Huang, Qiongyu & Xu, Chuhong & Xue, Xiaolong & Zhu, Hui, 2023. "Can digital innovation improve firm performance: Evidence from digital patents of Chinese listed firms," International Review of Financial Analysis, Elsevier, vol. 89(C).
    5. Wang, Yizhi & Lin, Yongjia & Fu, Xiaoqing & Chen, Songhe, 2023. "Institutional ownership heterogeneity and ESG performance: Evidence from China," Finance Research Letters, Elsevier, vol. 51(C).
    6. Yang, Yuan & Cai, Wenjia & Wang, Can, 2014. "Industrial CO2 intensity, indigenous innovation and R&D spillovers in China’s provinces," Applied Energy, Elsevier, vol. 131(C), pages 117-127.
    7. Bolognesi, Enrica & Burchi, Alberto, 2023. "The impact of the ESG disclosure on sell-side analysts’ target prices: The new era post Paris agreements," Research in International Business and Finance, Elsevier, vol. 64(C).
    8. Feng, Jingwen & Goodell, John W. & Shen, Dehua, 2022. "ESG rating and stock price crash risk: Evidence from China," Finance Research Letters, Elsevier, vol. 46(PB).
    9. Yoo, Sunbin & Managi, Shunsuke, 2022. "Disclosure or action: Evaluating ESG behavior towards financial performance," Finance Research Letters, Elsevier, vol. 44(C).
    10. Kim, Kihun & Kim, Tae-Nyun, 2023. "CEO career concerns and ESG investments," Finance Research Letters, Elsevier, vol. 55(PA).
    11. He, Feng & Du, Hanyu & Yu, Bo, 2022. "Corporate ESG performance and manager misconduct: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 82(C).
    12. Pedersen, Lasse Heje & Fitzgibbons, Shaun & Pomorski, Lukasz, 2021. "Responsible investing: The ESG-efficient frontier," Journal of Financial Economics, Elsevier, vol. 142(2), pages 572-597.
    13. Husted, Bryan W. & Sousa-Filho, José Milton de, 2019. "Board structure and environmental, social, and governance disclosure in Latin America," Journal of Business Research, Elsevier, vol. 102(C), pages 220-227.
    14. Maretno Harjoto & Indrarini Laksmana & Robert Lee, 2015. "Board Diversity and Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 132(4), pages 641-660, December.
    15. Wang, Liang & Qi, Jiahan & Zhuang, Hongyu, 2023. "Monitoring or Collusion? Multiple Large Shareholders and Corporate ESG Performance: Evidence from China," Finance Research Letters, Elsevier, vol. 53(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fu, Xintong & Zhang, Xiangwei, 2025. "Tax burden and enterprises' ESG performance," International Review of Financial Analysis, Elsevier, vol. 103(C).
    2. Zeng, Yongliang & Zhao, Xiangfang & Zhu, Yiwen, 2023. "Equity incentives and ESG performance: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PC).
    3. Wang, Zhen & Tang, Pei, 2024. "Substantive digital innovation or symbolic digital innovation: Which type of digital innovation is more conducive to corporate ESG performance?," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 1212-1228.
    4. Wang, Liang & Qi, Jiahan & Zhuang, Hongyu, 2023. "Monitoring or Collusion? Multiple Large Shareholders and Corporate ESG Performance: Evidence from China," Finance Research Letters, Elsevier, vol. 53(C).
    5. En Xie & Shuang Cao, 2023. "Can network attention effectively stimulate corporate ESG practices?—Evidence from China," PLOS ONE, Public Library of Science, vol. 18(12), pages 1-16, December.
    6. Li, Mangmang & Tang, Jinghua & Wu, Dingwen, 2025. "Beyond borders and industries: How cross-ownership drives ESG performance in China’ low-polluting firms after environmental regulation," Energy Economics, Elsevier, vol. 148(C).
    7. Mohamed Marie & Baolei Qi & Ali Meftah Gerged & Haitham Nobanee, 2024. "Exploring Environmental, Social and Governance research in the wake of COVID‐19: A bibliometric analysis of current trends and recommendations for future research," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(6), pages 6131-6149, November.
    8. Ren, Xiaohang & Zeng, Gudian & Zhao, Yang, 2023. "Digital finance and corporate ESG performance: Empirical evidence from listed companies in China," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    9. Yu, Haixu & Liang, Chuanyu & Liu, Zhaohua & Wang, He, 2023. "News-based ESG sentiment and stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 88(C).
    10. Zhu, Bo & Wang, Yansen, 2024. "Does social trust affect firms' ESG performance?," International Review of Financial Analysis, Elsevier, vol. 93(C).
    11. José Manuel Maside‐Sanfiz & Ana Iglesias‐Casal & Qusay Ayman Sulayman Mazahreh & Mª. Celia López‐Penabad, 2024. "The impact of competition on environmental and social performance in the MENA banking sector," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(6), pages 6290-6317, November.
    12. Asuman Erben Yavuz & Bade Ekim Kocaman & Mesut Doğan & Adalet Hazar & Şenol Babuşcu & Raikhan Sutbayeva, 2024. "The Impact of Corporate Governance on Sustainability Disclosures: A Comparison from the Perspective of Financial and Non-Financial Firms," Sustainability, MDPI, vol. 16(19), pages 1-21, September.
    13. Hyun-Jung Nam & Mehmet Huseyin Bilgin & Doojin Ryu, 2024. "Firm value, ownership structure, and strategic approaches to ESG activities," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(1), pages 187-226, March.
    14. Sabri Boubaker & Tu D. Q. Le & Riadh Manita & Thanh Ngo, 2025. "The trade-off frontier for ESG and Sharpe ratio: a bootstrapped double-frontier data envelopment analysis," Annals of Operations Research, Springer, vol. 347(1), pages 717-741, April.
    15. Serge Darolles & Gaëlle Le Fol & Yuyi He, 2023. "Who can better push firms to go "green"? A look at ESG effects on stock returns," Post-Print hal-04462749, HAL.
    16. Fan, Rui & Xu, Yuxuan & Yu, Liying & Qiu, Ran, 2025. "Sustainability needs trust: The role of social trust in driving corporate ESG performance," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 1492-1509.
    17. Gu, Jing & Shi, Xinyu & Wang, Junyao & Xu, Xun, 2024. "Examining the impact of market power discrepancy between supply chain partners on firm financial performance," International Journal of Production Economics, Elsevier, vol. 268(C).
    18. Mu, Weiwei & Liu, Kefu & Tao, Yunqing & Ye, Yongwei, 2023. "Digital finance and corporate ESG," Finance Research Letters, Elsevier, vol. 51(C).
    19. Liu, Xiaoqian & Cifuentes-Faura, Javier & Zhao, Shikuan & Wang, Long, 2024. "The impact of government environmental attention on firms’ ESG performance: Evidence from China," Research in International Business and Finance, Elsevier, vol. 67(PA).
    20. Di Song & Canyu Xu & Zewei Fu & Chao Yang, 2023. "How Does a Regulatory Minority Shareholder Influence the ESG Performance? A Quasi-Natural Experiment," Sustainability, MDPI, vol. 15(7), pages 1-22, April.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:riibaf:v:66:y:2023:i:c:s0275531923001757. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ribaf .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.