ESG rating disagreement and corporate digital transformation

Hao Ren

Finance Research Letters, 2025, vol. 75, issue C

Abstract: Despite the increasing focus on environmental, social, and governance (ESG) factors, discrepancies in ratings are weighing on a company's stakeholders. Based on the hypothesis of information asymmetry, this study uses Chinese A-share listed companies from 2010 to 2023 to examine how ESG rating disagreement impacts corporate digital transformation (CDT). Empirical results show that ESG rating discrepancy is associated with lower CDT, with technical innovation and financing constraints being the two mechanisms. When testing alternative approaches, including the alternative of CDT, propensity scoring matching and Heckman's two-stage model, the findings remain robust. The findings have policy implications for encouraging companies to disclose their ESG information in the context of digital economy.

Keywords: ESG rating disagreement; Corporate digital transformation; Technical innovation; Financing constraints (search for similar items in EconPapers)
JEL-codes: G31 O33 Q56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325001679

DOI: 10.1016/j.frl.2025.106903

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