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Does corporate digital transformation restrain ESG decoupling? Evidence from China

Author

Listed:
  • Xiangyu Chen

    (Zhejiang University of Finance and Economics)

  • Peng Wan

    (Zhejiang Gongshang University)

  • Zhefeng Ma

    (Zhejiang Gongshang University)

  • Yu Yang

    (Zhejiang Gongshang University)

Abstract

This paper empirically examines the efficacy of corporate digital transformation on a firm’s environmental, social, and governance (ESG) decoupling. Adopting the text analysis method and using a sample of Chinese A-share listed firms from 2010 to 2019, this paper finds that digital transformation can significantly alleviate ESG decoupling, and this relationship persists after robustness tests. Mechanism analysis reveals that digital transformation reduces ESG decoupling by improving information processing ability and relieving information asymmetry. The relationship between corporate digital transformation and ESG decoupling is stronger among companies in eastern China and firms that do not follow GRI guidance. The economic consequence analysis suggests that corporate digital transformation promotes firms’ high-quality development by reducing ESG decoupling. This study helps reveal corporate digital transformation’s empowering role and governance role in ESG decoupling and contributes to the growing literature on ESG decoupling and corporate digital transformation.

Suggested Citation

  • Xiangyu Chen & Peng Wan & Zhefeng Ma & Yu Yang, 2024. "Does corporate digital transformation restrain ESG decoupling? Evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    • Handle: RePEc:pal:palcom:v:11:y:2024:i:1:d:10.1057_s41599-024-02921-w
    DOI: 10.1057/s41599-024-02921-w
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