Digital transformation, financial performance and firm valuation: The moderating effect of environmental risk
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Issued Date
2025-12-01
Resource Type
eISSN
29497280
Scopus ID
2-s2.0-105022745705
Journal Title
Journal of Climate Finance
Volume
13
Rights Holder(s)
SCOPUS
Bibliographic Citation
Journal of Climate Finance Vol.13 (2025)
Suggested Citation
Moolkham M. Digital transformation, financial performance and firm valuation: The moderating effect of environmental risk. Journal of Climate Finance Vol.13 (2025). doi:10.1016/j.jclimf.2025.100075 Retrieved from: https://repository.li.mahidol.ac.th/handle/123456789/113336
Title
Digital transformation, financial performance and firm valuation: The moderating effect of environmental risk
Author(s)
Author's Affiliation
Corresponding Author(s)
Other Contributor(s)
Abstract
This study investigates how digital transformation affects firm valuation via financial performance, highlighting the moderating role of environmental risk, namely climate change and air pollution. It employs panel data from companies listed on the Stock Exchange of Thailand and utilizes partial least-squares structural equation modeling (PLS-SEM) for analysis. The results indicate that both core digital technologies and their applications have a positive and direct influence on financial performance and firm value, aligning with the national “Thailand 4.0” agenda. Additionally, the analysis suggests that improved financial performance serves as the primary mechanism by which digital transformation enhances firm value. However, this research presents a significant paradox when compared to existing literature. While previous studies propose that environmental risk can drive corporate digital adoption, the findings demonstrate that these same risks diminish the efficiency of the value-creation process. The study reveals that environmental risk not only directly undermines financial performance and firm value but, more critically, significantly reduces the positive, performance-mediated effect of digital transformation on firm value. This study advances key theoretical perspectives by showing that the value of digital assets is conditional on organizational resilience, reinforcing the resource-based view, contingency theory, and dynamic capabilities theory. It also extends signaling and stakeholder theories by highlighting the critical role of environmental context in shaping investor responses and strategic outcomes. The study suggests that, in an era characterized by increasing environmental risk, dependence solely on technology is insufficient. Firms must integrate environmental resilience to successfully convert digital transformation into sustainable long-term value gains.