Digital Transformation and Firms’ ESG Performance: The Moderating Effect of Financing Constraints

This study analyzes the impact of firm digital transformation on environmental, social, and corporate governance (ESG) performance, incorporating financing constraints as a moderating factor. Based on dynamic capability theory and resource orchestration theory, the analysis is conducted using panel data from China’s A-share listed firms between 2009 and 2025. Results show that digital transformation is positively associated with ESG performance, and that this association weakens as financing constraints intensify and may reverse when constraints are severe. The association is strongest among mature firms and among firms followed by more analysts. These findings identify financing constraints as a boundary condition for the conversion of digital transformation into ESG performance and suggest that easing financing constraints may help digital investment translate into sustainability outcomes.