Digital Transformation, CEO Compensation, and ESG Performance: Evidence from Chinese Listed Companies

Caiming Nie, Dor Kushinsky and Ting Ren ()
Additional contact information
Caiming Nie: HSBC Business School, Peking University, Shenzhen 518055, China
Dor Kushinsky: HSBC Business School, Peking University, Shenzhen 518055, China
Ting Ren: HSBC Business School, Peking University, Shenzhen 518055, China

Sustainability, 2025, vol. 17, issue 9, 1-23

Abstract: As sustainability reporting and ESG disclosure gain global importance, understanding the factors influencing ESG outcomes becomes crucial for policymakers, investors, and corporate decision-makers. China, a major player in the global economy, has recently taken steps to align its stock exchanges with international ESG reporting standards. In this context, the study examines the individual and joint effects of digital transformation and CEO compensation on ESG performance, considering moderating factors such as firm size, state ownership, and CEO age and gender. The research employs a comprehensive dataset containing 16,205 firm-year observations from 2018 to 2022, combining financial data, ESG ratings, and a matrix of word frequencies related to digital transformation extracted from annual reports. The study adopts a firm-year two-way fixed effect model, utilizing panel data and control variables to address potential endogeneity concerns and unobserved firm heterogeneity. The findings provide evidence supporting the positive impact of digital transformation and CEO compensation on ESG performance. The level of digital transformation is positively associated with ESG performance. This relationship is stronger for larger firms and firms with older CEOs, while state-owned enterprises show mixed results compared to non-SOEs. However, the effect of CEO compensation and ESG performance is stronger for male CEOs. This study thus contributes to the growing literature on ESG performance, digital transformation, and executive compensation by providing insights into their relationships in the context of Chinese listed companies.

Keywords: digital transformation; CEO compensation; ESG performance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/17/9/4033/pdf (application/pdf)
https://www.mdpi.com/2071-1050/17/9/4033/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:17:y:2025:i:9:p:4033-:d:1646241

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().