Digital Transformation and ESG Rating Disagreement: A Dynamic Relationship Test Based on Panel VAR Model

Jingwei Li

doi:10.71222/kq12jr56

Authors

Jingwei Li Capital University of Economics and Business, Beijing, 100070, China Author

DOI:

https://doi.org/10.71222/kq12jr56

Keywords:

digital transformation, ESG rating disagreement, panel VAR model, information asymmetry, financing constraints

Abstract

Previous research focuses on the unidirectional relationship between digital transformation and ESG rating disagreement, even though some evidence suggests that ESG rating disagreement can influence digital transformation, which in turn reduces ESG rating disagreement. Based on the panel VAR, we study the simultaneous relationship between digital transformation and ESG rating disagreement employing data of A-share listed companies from 2011 to 2023 and ESG ratings from eight agencies. Using the panel VAR model, impulse response functions, and variance decomposition, this study provides new empirical evidence on the dynamic relationship between ESG and digital transformation. The findings reveal that ESG rating disagreement and digital transformation exhibit a symmetrically bidirectional dynamic relationship. It is further suggested that ESG rating disagreement and digital transformation exhibit lagged effects on each other.

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