The Side Effects of Corporate Digitalization on Corporate Social Responsibility: A Fraud Triangle Perspective

Abstract

Although digital technologies can be powerful tools to fulfil environmental responsibilities, scant research has examined whether and how firms adopting these technologies evade environmental responsibilities. This study uses data on Chinese listed firms from 2012 to 2022 to explore whether corporate digitalization (CD) leads to corporate greenwashing (CGW). Our findings indicate that CD exacerbates CGW, as it exacerbates information asymmetry between companies and stakeholders through impression management, information manipulation and increasing the complexity of corporate operations, all of which can lead to CGW. Furthermore, building on the fraud triangle, we find that financial distress, digital misalignment and earnings manipulation exacerbate the main effect. This study contributes to the literature on the dark side of digital transformation in firm performance.