Digital transformation and firms' pollution emissions

Digital transformation presents a new driving force for green development. Using Chinese listed firms' data, this study measures digital transformation at the firm level from 2010 to 2020, investigating its impact on pollution emissions. The findings show that digital transformation can significantly reduce firms' pollution emissions, and the results remain robust when digital transformation is decomposed into technology-driven, application-innovative and policy-oriented digitalisation based on different calibres. Further investigation reveals that green technology innovation, factor allocation efficiency and environmental information disclosure are the potential mechanisms of digital transformation on reducing pollution emissions. Moreover, digital transformation has obvious heterogeneous effects on firms' pollution emissions based on differing external macro-environments and internal micro-characteristics, and these effects can be moderated by firms' performance evaluation and exogenous policy shocks. In addition, no evidence of a nonlinear relationship between digital transformation and firms' pollution emissions is found. These findings provide comprehensive new evidence with implications for firms and policymakers to promote digital transformation to advance pollution emissions reduction.