Mechanism Analysis and Path Study of Digital Transformation on Corporate Governance: Evidence from Chinese Listed Companies

Corporate digital transformation, primarily driven by data and leveraging digital technologies and mathematical algorithms such as Internet+, big data, cloud computing, artificial intelligence, and blockchain, is a crucial enabler of sustainable development. This transformation integrates various aspects of corporate production and operations, enhancing the level of digital operations and ultimately contributing to high-quality and sustainable development. This paper, based on data from listed companies in China’s A-shares from 2007 to 2021, theoretically articulates the intrinsic mechanism between corporate digital transformation and corporate governance level, with a focus on sustainability. It empirically finds that a higher degree of digital transformation correlates with an improved level of corporate governance, fostering sustainable practices. Further investigation reveals that digital transformation elevates corporate governance by enhancing innovation capabilities, reducing information asymmetry, and promoting sustainable strategies. This paper provides policy insights for promoting corporate digital transformation as a means to achieve sustainability goals and optimizing management’s corporate governance level for long-term sustainable success.