The peer effect of digital transformation and corporate environmental performance: Empirical evidence from listed companies in China

Enhancing corporate environmental performance is crucial to addressing the global climate crisis. The extant research has explored the factors influencing environmental performance at the macroeconomic level. In contrast, this study focuses on micro-firms and selects a sample of Chinese-listed companies from 2011 to 2021 to investigate how the peer effect of digital transformation impact corporate environmental performance. Machine learning and textual analysis are adopted to measure digital transformation. Environmental performance is measured by corporate carbon emission reduction and the environmental score in the environmental, social, and governance (ESG) rating. This paper confirms that the industry and regional peer effects of digital transformation contribute to environmental performance. The industry peer effect of digital transformation can improve corporate environmental performance by promoting innovation, while the regional peer effect of digital transformation can alleviate corporate financing constraints, improving its environmental performance. This paper can serve as a reference for companies to explore sustainable development and for governments to formulate environmental protection policies.