How Does Digital Transformation Affect Corporate Reputation - Evidence From Listed Companies in China

Abstract

In the wave of digital economy, digital transformation has become a key pathway for enhancing corporate competitiveness. This study selects data from A-share listed companies in Shanghai and Shenzhen between 2000 and 2022 as the initial sample to measure digital transformation. The results demonstrate a pronounced positive correlation between digital transformation and corporate reputation, which persists even after accounting for endogeneity and conducting variable substitutions. Through mediation effect analysis, digitalization profoundly impacts enterprises through internal and external effects. The internal effect focuses on improving the financial status of enterprises, stimulating innovation potential, and risk-taking levels; the external impact is reflected in improving information transparency and enhancing market competitiveness. Together, these effects contribute to an enterprise's improved reputation in the process of digital transformation. Through the heterogeneity analysis, it is found that the impact of digital transformation on corporate reputation varies according to the size characteristics of the enterprise, the nature of ownership, and the type of industry, as well as the time of the enterprise's listing. It is concluded that digitalization has a more significant impact on corporate reputation in enterprises with smaller sizes and shorter listing markets. The impact of digitization on reputation is less in firms with mixed ownership nature of equity and industry of manufacturing. This study provides evidence and insights to promote digital transformation for corporate reputation management in the context of digitization.