The Research on Non-Linear Relationship between Enterprise Digital Transformation and Stock Price Crash Risk
Enterprise digital transformation which is conducted by individual enterprises is an essential strategic transformation. Although enterprises can obtain digital technology bonuses, they have to face short-term losses caused by adjusting the organizational management systems. This study incorporates the digital technology-enabling effect of digital transformation and corporate governance into the same analytical framework, while utilizing the data of Chinese A-share listed companies to examine the impact and internal impacting mechanism of digital transformation on stock price crash risk. The findings reveal that the impact of digital transformation on stock price crash risk is represented by an inverted U-shaped trend, with digital transformation initially intensifying the risk of stock price crash while restraining the risk of stock price crash stock price crash risk after its implementation This observation is supported by robustness and endogeneity tests. The majority of enterprises still locates at the left half of the inverted U-shaped curve for the digital transformation level, the impact of digital transformation on the risk of a company's stock price crash is primarily manifested as an aggravating effect. In addition, these findings reveal that digital transformation which may initially increase agency costs, breeds managerial overconfidence, and reduces information efficiency in capital markets which has an impact on the stock price crash. Finally, the result of heterogeneity analysis reveals that the impact of enterprise digital transformation on the risk of stock price crash is variable between enterprises of different scales, such that the aggravating effect mainly occurs in small-scale enterprises and the positive enabling effect is more pronounced in large-scale with the advancement of digital transformation
Year of publication: |
2023
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Authors: | Ai, Yongfang ; chi, zheng ; sun, guanglin ; Zhou, Han ; kong, tao |
Publisher: |
[S.l.] : SSRN |
Saved in:
freely available
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