Essays on digital and sustainable finance

The first chapter sheds light on the impact of data risks on the increasingly digitalized financial system by examining the direct and spillover effects of bank data breaches on deposits. Leveraging a hand-collected novel dataset that identifies breaches at the bank-state level in the U.S., I find that data breaches reduce deposits at breached banks. Moreover, within the local deposit market, data breaches lead to not only a reallocation but also a net drop in deposits. Beyond the local market, I document negative within-bank, cross-state spillovers, with smaller banks being more vulnerable than larger ones. Further analysis reveals that depositor reactions are primarily driven by the demand for privacy and intensify as the scale of the breach increases. The second chapter examines the impact of digital reporting on the sustainability information environment. Exploiting the staggered implementation of the SEC’s iXBRL mandate as a quasi-experiment, I find that digital reporting induces firms to expand sustainability disclosure, reduces ESG rating disagreement, but also incentivizes cheap talk. These results suggest that digital reporting improves the accessibility and comparability of sustainability information but may undermine its quality. This chapter highlights both the benefits and unintended consequences of emerging technologies in shaping the non-financial information environment. The third chapter, co-authored with Huiyun Li and Qianying Liu, investigates the association between common ownership and corporate sustainability performance, as well as the moderating role of public attention to environmental issues. Using data on Chinese A-share listed firms, we show that common ownership is positively associated with firms’ sustainability performance, and that this relationship is positively moderated by public attention to environmental issues. The underlying channel varies with the level of public attention: the information transmission channel dominates in regions with high public attention, whereas the governance channel becomes more pronounced in regions with low public attention.