With shifting digital era governance, interest in the link between firms' ESG performance and digital governments has grown, especially for construction firms facing carbon reduction, safety and corruption concerns. However, no empirical evidence supports this theory. In response, the study investigates digital government's effects on construction firms' ESG performance, mechanisms and heterogeneity.
Using panel data on listed construction firms in China from 2009 to 2022, this study applies a difference-in-differences (DID) model and mediation models to test the mechanisms and heterogeneous effects in the relationship between digital government and construction firms' ESG performance.
This study shows digital government boosts construction firms' ESG by enhancing environmental oversight, reducing bank information asymmetry and increasing media scrutiny, especially in highly marketized regions, construction firms with strong green innovation, and state-owned enterprises.
Governments should improve construction firms' ESG performance via cross-boundary collaboration with key stakeholders and adopt strategies tailored to different firm types.
This study examines digital government as a new predictor of ESG performance in construction firms, enriching the knowledge base. Based on digital governance theory, this study proposes a digital governance triangle of government, banks and media. This study will benefit researchers, construction professionals and policymakers.
