ESG rating disagreement and corporate digital transformation

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.