Mandatory Environmental Information Disclosure, Information Infrastructure And the Firm's Digital Transformation

This paper assesses the impact of mandatory environmental information disclosure on the firm’s digital transformation and the conditions for its realization. We take China’s Measures on Environmental Information Disclosure for Enterprises and Institutions (EIDEI) implemented in 2015 as an exogenous shock and use a staggered difference-in-differences (DID) model to analyze the problem based on data of Chinese A-share listed manufacturing firms from 2011-2019. We find that in the short term, environmental information regulation can hardly stimulate the firm’s digital transformation, but the improvement of regional information infrastructure can provide the conditions for the firm’s digital transformation, which has a positive moderating effect on the relationship between environmental information regulation and the firm’s digital transformation. The results are robust after testing the policy heterogeneity treatment effect, parallel trend test, and placebo test. The heterogeneity analysis shows that the moderating effect of regional information infrastructure improvement has a larger significant impact on the digitalization transformation of non-state-owned enterprises (non-SOE) and firms in technology-leading regions. The mechanism tests confirm that under environmental information regulation, regional information infrastructure increases the opportunity cost of a firm’s unproductive behavior, reduces the cost of a firm’s digital transformation through technology spillover and talent support, and increases the benefits of the firm’s digital transformation based on stimulating regional digital demand. This reveals the realization path of Porter’s hypothesis in China and helps to understand the micro effects of environmental information disclosure under the multi-objectives of government governance