IDEAS home Printed from https://ideas.repec.org/a/rjr/romjef/vy2025i2p62-83.html
   My bibliography  Save this article

AI-Based Digitalization and ESG of Multinational Corporations

Author

Listed:
  • Ye CHEN

    (School of Economics, Southwest Minzu University, Chengdu 610200, China.)

  • Xudong HUANG

    (School of International Business, Southwestern University of Finance and Economics, Chengdu 611130, Sichuan, China.)

  • Xiaomin LIU

    (School of Economics, Southwest Minzu University, Chengdu 610200, China.)

  • Gang WU

    (School of Economics, Southwest Minzu University, Chengdu 610200, China.)

  • Zenglin WU

    (Woosong University, Daejeon Metropolitan City, 34406, South Korea.)

Abstract

To achieve the "3060" dual-carbon goal, China has been constantly advancing its corporate ESG system, aiming to elevate ESG rating. AI technology has become a major driver for improving corporate ESG performance by optimizing decision-making and enhancing resource efficiency through digitalization. This study explores the impact of AI-based digital transformation on corporate ESG performance based on the data of A-share listed multinational companies spanning the years 2009 to 2022. The findings indicate that digital transformation significantly improves enterprises' ESG scores, showing an empowerment effect. The Mediation effect test shows that digital transformation promotes ESG performance by alleviating financial constraints and enhancing green innovation. Government subsidies positively moderate the relationship between digital transformation and financial constraints. In addition, the enhancement of digital transformation on ESG performance is more significant in state-controlled, large-scale enterprises and enterprises with two-job separation. The study provides new perspectives on the construction of ESG system for multinational enterprises in the context of AI technology and suggests that enterprises accelerate their digital transformation and enhance ESG disclosure, while governments and regulators should improve digital infrastructure and provide incentive policies. This study investigates the influence of digital transformation on ESG performance, with a specific emphasis on non-economic benefits. It offers practical insights for multinational enterprises in developing countries to establish and enhance their ESG systems within the context of the digital era. Furthermore, the findings serve as a critical reference for promoting the integration of AI technologies into ESG practices, thereby advancing sustainable development.

Suggested Citation

  • Ye CHEN & Xudong HUANG & Xiaomin LIU & Gang WU & Zenglin WU, 2025. "AI-Based Digitalization and ESG of Multinational Corporations," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 62-83, July.
    • Handle: RePEc:rjr:romjef:v::y:2025:i:2:p:62-83
    as

    Download full text from publisher

    File URL: https://www.ipe.ro/ftp/RePEc/rjef2_2025/rjef2_2025p62-83.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chibane, Messaoud & Joubrel, Mathieu, 2024. "The ESG-efficient frontier under ESG rating uncertainty," Finance Research Letters, Elsevier, vol. 67(PB).
    2. Paul A. Gompers & Andrew Metrick, 2001. "Institutional Investors and Equity Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 229-259.
    3. Linda Thorne & Lois S. Mahoney & Giacomo Manetti, 2014. "Motivations for issuing standalone CSR reports: a survey of Canadian firms," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 27(4), pages 686-714, April.
    4. Naiping Zhu & Siyi Zhang & Yueyong Zhou, 2023. "Impacts of Environmental Regulation on Corporate ESG Performance – Evidence from China," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 62-82, October.
    5. Halpern, Nigel & Mwesiumo, Deodat & Suau-Sanchez, Pere & Budd, Thomas & Bråthen, Svein, 2021. "Ready for digital transformation? The effect of organisational readiness, innovation, airport size and ownership on digital change at airports," Journal of Air Transport Management, Elsevier, vol. 90(C).
    6. El Ghoul, Sadok & Guedhami, Omrane & Kwok, Chuck C.Y. & Mishra, Dev R., 2011. "Does corporate social responsibility affect the cost of capital?," Journal of Banking & Finance, Elsevier, vol. 35(9), pages 2388-2406, September.
    7. Karl V. Lins & Henri Servaes & Ane Tamayo, 2017. "Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility during the Financial Crisis," Journal of Finance, American Finance Association, vol. 72(4), pages 1785-1824, August.
    8. Crifo, Patricia & Forget, Vanina D. & Teyssier, Sabrina, 2015. "The price of environmental, social and governance practice disclosure: An experiment with professional private equity investors," Journal of Corporate Finance, Elsevier, vol. 30(C), pages 168-194.
    9. Linda Thorne & Lois S. Mahoney & Giacomo Manetti, 2014. "Motivations for issuing standalone CSR reports: a survey of Canadian firms," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 27(4), pages 686-714, April.
    10. Arthur Lewbel, 1997. "Constructing Instruments for Regressions with Measurement Error when no Additional Data are Available, with an Application to Patents and R&D," Econometrica, Econometric Society, vol. 65(5), pages 1201-1214, September.
    11. Papathanasiou, Spyros & Koutsokostas, Drosos, 2024. "Sustainability ratings and fund performance: New evidence from European ESG equity mutual funds," Finance Research Letters, Elsevier, vol. 62(PA).
    12. Charles J. Hadlock & Joshua R. Pierce, 2010. "New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index," The Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 1909-1940.
    13. Avramov, Doron & Cheng, Si & Lioui, Abraham & Tarelli, Andrea, 2022. "Sustainable investing with ESG rating uncertainty," Journal of Financial Economics, Elsevier, vol. 145(2), pages 642-664.
    14. Bhandari, Avishek & Javakhadze, David, 2017. "Corporate social responsibility and capital allocation efficiency," Journal of Corporate Finance, Elsevier, vol. 43(C), pages 354-377.
    15. repec:eme:aaaj00:aaaj-07-2013-1393 is not listed on IDEAS
    16. Glen Dowell & Stuart Hart & Bernard Yeung, 2000. "Do Corporate Global Environmental Standards Create or Destroy Market Value?," Management Science, INFORMS, vol. 46(8), pages 1059-1074, August.
    17. Raquel Sanchis & Luca Canetta & Raúl Poler, 2020. "A Conceptual Reference Framework for Enterprise Resilience Enhancement," Sustainability, MDPI, vol. 12(4), pages 1-27, February.
    18. Borja Diez-Cañamero & Tania Bishara & Jose Ramon Otegi-Olaso & Rikardo Minguez & José María Fernández, 2020. "Measurement of Corporate Social Responsibility: A Review of Corporate Sustainability Indexes, Rankings and Ratings," Sustainability, MDPI, vol. 12(5), pages 1-36, March.
    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. Hans B. Christensen & Luzi Hail & Christian Leuz, 2021. "Mandatory CSR and sustainability reporting: economic analysis and literature review," Review of Accounting Studies, Springer, vol. 26(3), pages 1176-1248, September.
    2. Li, Chengcheng & Wang, Xiaoqiong, 2022. "Local peer effects of corporate social responsibility," Journal of Corporate Finance, Elsevier, vol. 73(C).
    3. Stefano Piserà & Luca Gandullia & Claudia Girardone, 2025. "Do responsible practices lead to higher firm productivity? Evidence from Europe," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 2186-2214, July.
    4. Jie Cao & Hao Liang & Xintong Zhan, 2019. "Peer Effects of Corporate Social Responsibility," Management Science, INFORMS, vol. 65(12), pages 5487-5503, December.
    5. Roy, Partha P. & Rao, Sandeep & Zhu, Min, 2022. "Mandatory CSR expenditure and stock market liquidity," Journal of Corporate Finance, Elsevier, vol. 72(C).
    6. Dongmin Kong & Jia Liu & Yanan Wang & Ling Zhu, 2024. "Employee Stock Ownership Plans and Corporate Environmental Engagement," Journal of Business Ethics, Springer, vol. 189(1), pages 177-199, January.
    7. Fiaz Ahmad Sulehri & Saba Sharif, 2022. "The Impact of Firm Sustainability on Firm Growth: Evidence from USA," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(2), pages 1-15, August.
    8. Lu Zhang & Yuan George Shan & Millicent Chang, 2021. "Can CSR Disclosure Protect Firm Reputation During Financial Restatements?," Journal of Business Ethics, Springer, vol. 173(1), pages 157-184, September.
    9. Malik, Ihtisham A. & Chowdhury, Hasibul & Alam, Md Samsul, 2023. "Equity market response to natural disasters: Does firm's corporate social responsibility make difference?," Global Finance Journal, Elsevier, vol. 55(C).
    10. Angelidis, Timotheos & Michairinas, Athanasios & Sakkas, Athanasios, 2024. "World ESG performance and economic activity," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 93(C).
    11. V. Veeravel & E. K. S. Sadharma & Bandi Kamaiah, 2024. "Do ESG disclosures lead to superior firm performance? A method of moments panel quantile regression approach," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 741-754, January.
    12. Jiancheng Shen & Chen Chen & Zheng Liu, 2023. "Does environmental investment pay off?—portfolio analyses of the E in ESG during political conflicts and public health crises," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 46(S1), pages 107-131, December.
    13. Ramzi Benkraiem & Maria Qureshi & Asif Saeed & Constantin Zopounidis, 2024. "Corporate social responsibility, carbon footprints and stock market valuation," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 33(3), pages 213-237, August.
    14. Liu, Frank Hong & Wu, Qiang & Zhou, Yue, 2024. "Bank deregulation and corporate social responsibility," Journal of Financial Stability, Elsevier, vol. 74(C).
    15. Anagnostopoulou, Seraina C. & Tsekrekos, Andrianos E. & Voulgaris, Georgios, 2021. "Accounting conservatism and corporate social responsibility," The British Accounting Review, Elsevier, vol. 53(4).
    16. Liu, Xianda & Hou, Wenxuan & Main, Brian G.M., 2022. "Anti-market sentiment and corporate social responsibility: Evidence from anti-Jewish pogroms," Journal of Corporate Finance, Elsevier, vol. 76(C).
    17. Ruixi Long & Shuyang Jia, 2023. "Foreground or background my social responsibility: impact of the trade war on the readability of corporate social responsibility disclosures," Information Technology and Management, Springer, vol. 24(1), pages 79-97, March.
    18. Qinglan Wu & Guifu Chen & Jing Han & Liyan Wu, 2022. "Does Corporate ESG Performance Improve Export Intensity? Evidence from Chinese Listed Firms," Sustainability, MDPI, vol. 14(20), pages 1-16, October.
    19. Jongwon Park & Sunyoung Kim & Albert Tsang, 2023. "CEO Personal Hedging and Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 182(1), pages 199-221, January.
    20. R. Benkraiem & M. Qureshi & A. Saeed & C. Zopounidis, 2024. "Corporate Social Responsibility, Carbon Footprints and Stock Market Valuation," Post-Print hal-04679536, HAL.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

    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:rjr:romjef:v::y:2025:i:2:p:62-83. 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: Corina Saman The email address of this maintainer does not seem to be valid anymore. Please ask Corina Saman to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/ipacaro.html .

    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.