Dose Digital Innovation Produce Better ESG Performance? An Empirical Test of Shenzhen A-Listed Firms in China

The application of digital technology has reshaped the innovation paradigm. In the given context, this paper reveals the internal influence mechanism of digital innovation on firm ESG based on the data of Chinese Shenzhen A-share listed firms. The results show that digital innovation significantly and positively impacts ESG performance of firms, analysts focus and information disclosure quality have significant mediating effect. Furthermore, we find that internal financial stability mitigates such positive impacts of digital innovation, while external institutional investor shareholding strengthens the relationship. In addition, the positive effect of digital innovation on ESG performance is more pronounced in service-oriented and competitive firms, firms with executive equity incentive systems. This study provides a timely assessment of the value of digital innovation from the new perspective of sustainability and enrich the literature on the digital innovation and ESG performance