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Beyond the Binary: The Impact of Digital Transformation on Firm Responsibility and Governance

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Wang, Tianli, Xinyi Lv, Yujie Shang, and Xiaoyu Chen. 2023. “Beyond the Binary: The Impact of Digital Transformation on Firm Responsibility and Governance.” SSRN Scholarly Paper. Rochester, NY: Social Science Reseach Network (SSRN).

We explore how digital transformation influences firm responsibility fulfillment and corporate governance among Chinese A-share companies from an information disclosure perspective, considering shared prosperity and corporate interaction. Using instrumental variable and reduced-form difference-in-differences analysis, we find that digital transformation positively promotes stakeholder protection and social responsibility fulfillment by firms. However, it also exerts a suppressive effect on environmental responsibility fulfillment. Further investigation indicates that digital transformation fosters social responsibility fulfillment related to stakeholders by reducing information transmission costs among employees and enhancing equality. Conversely, higher levels of digital transformation may lead to increased carbon emissions and environmental pollution, hindering environmental responsibility fulfillment. Additionally, we observe that financing constraints incentivize social responsibility fulfillment. We offer valuable empirical evidence to understand the intricate relationship between digital transformation and firm responsibility, providing insights for businesses and policymakers.

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