Governance effect of digital washing on corporate sustainable growth

초록

This study examines the governance effect of digital washing on corporate sustainable development. Although digital transformation is widely regarded as a driver of long-term value creation, some firms engage in symbolic digital narratives that exaggerate their digital capabilities without substantive operational changes, raising concerns about the implications for corporate sustainable growth. Drawing on perspectives of governance and information asymmetry, we investigate whether and how digital washing influences firms' corporate sustainable growth outcomes. Utilizing a panel of Chinese A-share-listed firms from 2014 to 2023, we find that digital washing is significantly negatively associated with corporate sustainable growth, suggesting that symbolic digital signaling undermines long-term value creation. Furthermore, this negative effect is contingent on firms' governance and information environments. Specifically, technical efficiency, knowledge value, and investor attention condition the extent to which digital washing impacts corporate sustainable growth. By distinguishing digital washing from substantive digital transformation, this study enhances the understanding of the adverse effects of digital narratives and contributes to the literature on digitalization and corporate sustainable growth. Our findings highlight the risks associated with superficial digital communication and underscore the importance of aligning digital disclosures with genuine operational capabilities to achieve corporate sustainable growth.

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