Relationships between Digital Transformation and Corporate Sustainability: The Case of China

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Businesses and governments alike must explore extra sustainability reserves, including those associated with digital transformation, in the current VUCA (volatility, uncertainty, complexity and ambiguity) world. The purpose of the article is to identify the relationship between digital transformation and corporate sustainability and to justify investor attention as a moderating factor in this relationship. To achieve this goal, the authors formulated and tested two hypotheses: (1) digital transformation has a positive impact on corporate sustainability; (2) investor attention is a moderating factor in the relationship between digital transformation and corporate sustainability. The regression analysis uses data on China's listed companies from 2013 to 2022 (5,367 observations). The authors found a significant positive relationship between digital transformation and corporate sustainability. It is empirically proven that digital transformation contributes to corporate sustainability. This conclusion remains sound after a succession of robust tests have been carried out. The study confirmed that investor attention plays a significant moderating role in the relationship between digital transformation and corporate sustainability. The heterogeneity test showed that the impact of digital transformation on corporate sustainability is, firstly, more pronounced for state-owned enterprises in China, and secondly, it is more noticeable in the regions of China with a more developed institutional environment. The theoretical significance of this study is to confirm the value of introducing the moderating variable of “investor attention” between digital transformation and corporate sustainability, expanding the traditional framework for studying the impact of digital transformation on corporate sustainability. The practical significance is to provide more evidence that the adoption of digital technologies by firms facilitates the sustainable development of their businesses. The study is also of great value to governments, as it justifies the relevance of institutional change for successful digitization and sustainable development.