The Slow Dividend: Lagged Effects and Quality-Selective Transmission of Digital Finance to Corporate ESG Performance

This study re-examines the effect of digital finance on corporate ESG performance, arguing that the modest and specification-sensitive estimates in prior research stem from a pervasive omission of temporal dynamics. Using a panel of Chinese A-share listed firms and a distributed-lag framework, we show that the ESG payoff of digital finance is intrinsically dynamic: contemporaneous associations are statistically indistinguishable from zero, whereas lagged effects of usage depth are robustly positive, so static specifications can therefore understate the delayed cumulative association. The positive lagged associations persist in several alternative specifications. Transmission is quality-selective: digital finance stimulates green invention patents more strongly than utility-model patents, with formal cross-channel tests confirming that the invention-based pathway is significantly stronger. External audit assurance provides additional evidence that the translation of digital-finance capabilities into ESG outcomes depends partly on firms’ information and governance environment. The effect is also structurally uneven: environmental and governance pillars improve while the social pillar declines, and formal cross-pillar tests confirm a significant E/G-versus-S divide, with significant differences in the digital-finance–ESG association by state ownership and firm size. The findings reframe digital finance as a slow, selective, and structurally uneven driver of sustainable corporate transformation.