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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
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    Keywords

    Digital innovation; ESG; Sustainable development; Analyst focus; Firm performance;
    All these 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

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