Advances in Digital Transformation, ESG Transparency and Corporate Financial Performance: Empirical Evidence from Emerging Asian Markets

Linda Harrison, Min-Seok Kim

The convergence of enterprise digital transformation and environmental, social, and governance (ESG) compliance has emerged as a fundamental determinant of sustainable corporate competitiveness. This study empirically examines the interactive impact of digital capability adoption and ESG disclosure transparency on firm valuation (Tobin's Q) and operating profitability (ROA) across a comprehensive longitudinal panel of publicly listed corporations in emerging Asian economies. Using multi-stage dynamic panel Generalized Method of Moments (System GMM) estimations and instrumental variable techniques to mitigate endogeneity, the empirical findings demonstrate that digital technology investments exert a statistically significant positive effect on corporate financial performance (beta = 0.285, p < 0.01). Crucially, ESG disclosure transparency acts as a strong positive moderator, amplifying the financial returns of digitalization by enhancing stakeholder trust, lowering sovereign debt costs, and mitigating institutional information asymmetry. Heterogeneity analyses reveal that the positive moderation is most pronounced in high-pollution and technology-intensive manufacturing sectors. The paper provides actionable strategic recommendations for corporate boards, institutional investors, and regulatory authorities seeking to align digital innovation agendas with sustainability mandates.