The Impact of Digital Transformation on Corporate Environmental Performance: Empirical Evidence from China
Abstract
As digital transformation accelerates and the transition toward sustainable development intensifies, improving corporate environmental performance has become essential for achieving green and low-carbon development. However, limited attention has been paid to the multiple pathways through which digital transformation affects environmental performance and the conditions under which these effects occur. This study examines the impact of digital transformation on corporate environmental performance using an unbalanced panel of 2743 non-financial firms listed on the Shanghai and Shenzhen A-share stock exchanges in China from 2015 to 2024, yielding 14,163 firm–year observations. Firm and year fixed-effects models are employed to examine the causal relationship, its underlying mechanisms, and the moderating role of government subsidies, with extensive endogeneity and robustness tests conducted to assess the reliability of the findings. The findings show that digital transformation significantly improves corporate environmental performance through green technological innovation, resource allocation efficiency, media coverage, and analyst attention. Government subsidies further strengthen this relationship. Additional analyses reveal heterogeneous effects across firms with varying executive green cognition, CEO information technology backgrounds, and industry pollution intensity, while also providing evidence supportive of the Porter Hypothesis and consistent with the Matthew Effect regarding the simultaneous improvement in environmental and economic performance and the widening of inter-firm performance disparities, respectively. This study advances the literature on digital transformation and environmental governance by identifying the mechanisms, boundary conditions, and heterogeneous effects underlying this relationship, and provides practical implications for promoting corporate sustainability and green transition.