IDEAS home Printed from https://ideas.repec.org/a/eee/ecofin/v74y2024ics1062940824001785.html
   My bibliography  Save this article

The impact of MD&A digital transformation information disclosure on stock price synchronicity in China

Author

Listed:
  • Guo, Jinwen
  • Duan, Jiangjiao

Abstract

With the continuous development of the global digital economy, digital transformation has become an important path for enterprises. The management discussion and analysis (MD&A) section of listed companies’ annual reports has progressively incorporated detailed information on their ongoing digital transformation efforts, reflecting the growing significance of this trend in corporate reporting. This paper uses data from 2011 to 2022 of A-share listed companies in China to investigate whether and how the MD&A digital transformation information affects the stock price synchronicity. The frequency of keywords related to digital transformation within the MD&A section of the annual report is analyzed and measured to quantify digital transformation information. The results show that digital transformation information in MD&A can significantly reduce stock price synchronicity. Further mechanism tests show that analyst and media act as information intermediaries to disseminate more firm-specific information to the market. In addition, heterogeneity tests show that this effect is mainly reflected in state-owned companies and larger companies. These findings provide valuable insights for policymakers, investors, and regulators in planning regulations.

Suggested Citation

  • Guo, Jinwen & Duan, Jiangjiao, 2024. "The impact of MD&A digital transformation information disclosure on stock price synchronicity in China," The North American Journal of Economics and Finance, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:ecofin:v:74:y:2024:i:c:s1062940824001785
    DOI: 10.1016/j.najef.2024.102253
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1062940824001785
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.najef.2024.102253?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gao, Xin & Xu, Weidong & Li, Donghui & Xing, Lu, 2021. "Media coverage and investment efficiency," Journal of Empirical Finance, Elsevier, vol. 63(C), pages 270-293.
    2. Fei Su & Lili Zhai & Jianmei Liu, 2023. "Do MD&A Risk Disclosures Reduce Stock Price Crash Risk? Evidence from China," IJFS, MDPI, vol. 11(4), pages 1-24, December.
    3. Jin, Li & Myers, Stewart C., 2006. "R2 around the world: New theory and new tests," Journal of Financial Economics, Elsevier, vol. 79(2), pages 257-292, February.
    4. Zhou, Weihua & Li, Yuanjie & Wang, Deli & Xueqin, Du & Ke, Yishun, 2024. "Management's tone in MD&A disclosure and investment efficiency: Evidence from China," Finance Research Letters, Elsevier, vol. 59(C).
    5. Zhu, Changchun & Li, Na & Ma, Jing, 2024. "Impact of CEO overconfidence on enterprise digital transformation: Moderating effect based on digital finance," Finance Research Letters, Elsevier, vol. 59(C).
    6. Hong Chen & Mengyun Zhang & Jun Zeng & Hongjing Pu, 2023. "Institutional investors' site visits, market attention, and stock market information efficiency—Evidence from stock price synchronicity," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 1833-1845, June.
    7. Zhang, Qiyu & Ding, Rong & Chen, Ding & Zhang, Xiaoxiang, 2023. "The effects of mandatory ESG disclosure on price discovery efficiency around the world," International Review of Financial Analysis, Elsevier, vol. 89(C).
    8. Barka, Zeineb & Benkraiem, Ramzi & Hamza, Taher & Lakhal, Faten & Vigne, Samuel, 2023. "Institutional investor horizon and stock price synchronicity: Do product market competition and analyst coverage matter?," International Review of Financial Analysis, Elsevier, vol. 89(C).
    9. Baker, Malcolm & Wurgler, Jeffrey & Yuan, Yu, 2012. "Global, local, and contagious investor sentiment," Journal of Financial Economics, Elsevier, vol. 104(2), pages 272-287.
    10. Li, Xiaoqing & Qiao, Penghua & Zhao, Lin, 2019. "CEO media exposure, political connection and Chinese firms' stock price synchronicity," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 61-75.
    11. Zeineb Barka & Ramzi Benkraiem & Taher Hamza & Faten Lakhal & Samuel Vigne, 2023. "Institutional investor horizon and stock price synchronicity: Do product market competition and analyst coverage matter?," Post-Print hal-04193270, HAL.
    12. Cai, Wenwu & Quan, Xiaofeng & Zhu, Zhenmei (Judy), 2023. "Rumors in the sky: Corporate rumors and stock price synchronicity," International Review of Financial Analysis, Elsevier, vol. 88(C).
    13. Donghua Zhou & Yujie Zhao & Philip T Lin & Bin Li & Adrian (Waikong) Cheung, 2019. "Can microblogging information disclosure reduce stock price synchronicity? Evidence from China," Australian Journal of Management, Australian School of Business, vol. 44(2), pages 282-305, May.
    14. Qiuyue Zhang & Yu Cao, 2023. "Revolutionizing Chinese Manufacturing: Uncovering the Nexus of Intelligent Transformation and Capital Market Information Efficiency," Sustainability, MDPI, vol. 15(19), pages 1-19, October.
    15. Du, Juntao & Shen, Zhiyang & Song, Malin & Zhang, Linda, 2023. "Nexus between digital transformation and energy technology innovation: An empirical test of A-share listed enterprises," Energy Economics, Elsevier, vol. 120(C).
    16. Hu, Jianxiong & Zou, Qing & Yin, Qianqian, 2023. "Research on the effect of ESG performance on stock price synchronicity: Empirical evidence from China's capital markets," Finance Research Letters, Elsevier, vol. 55(PA).
    17. Gan, Xiaojun & Hu, Pei, 2023. "Managerial ability and stock price synchronicity," Finance Research Letters, Elsevier, vol. 56(C).
    18. Liu, Huan & Hou, Canran, 2019. "Does trade credit alleviate stock price synchronicity? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 61(C), pages 141-155.
    19. Li, Ying & Lu, Miao & Lo, Y. Ling, 2019. "The impact of analyst coverage on partial acquisitions: Evidence from M&A premium and firm performance in China," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 37-60.
    20. Chen, Xing & Diao, Xundi & Wu, Chongfeng, 2022. "Heterogeneous investor attention and post earnings announcement drift: Evidence from China," Economic Modelling, Elsevier, vol. 110(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Kai & Zhao, Jingjing & Zhou, Jun, 2024. "Online sales and stock price synchronicity: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 95(PA).
    2. Ren, He & Ye, Linlin & Zheng, Shi, 2024. "Share repurchase and capital market pricing efficiency," Finance Research Letters, Elsevier, vol. 60(C).
    3. Li, Qinyang & Liu, Xiangqiang & Chen, Jing & Wang, Huaixin, 2022. "Does stock market liberalization reduce stock price synchronicity? —Evidence from the Shanghai-Hong Kong Stock Connect," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 25-38.
    4. Chue, Timothy K. & Gul, Ferdinand A. & Mian, G. Mujtaba, 2019. "Aggregate investor sentiment and stock return synchronicity," Journal of Banking & Finance, Elsevier, vol. 108(C).
    5. Fenghua Wen & Yujie Yuan & Wei‐Xing Zhou, 2021. "Cross‐shareholding networks and stock price synchronicity: Evidence from China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 914-948, January.
    6. Cheema, Arbab K. & Eshraghi, Arman & Wang, Qingwei, 2023. "Macroeconomic news and price synchronicity," Journal of Empirical Finance, Elsevier, vol. 73(C), pages 390-412.
    7. Su, Kun & Zhang, Miaomiao & Liu, Chengyun, 2022. "Financial derivatives, analyst forecasts, and stock price synchronicity: Evidence from an emerging market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 81(C).
    8. Xu, Yingying & Lien, Donald, 2022. "Which affects stock performances more, words or deeds of the key person?," International Review of Financial Analysis, Elsevier, vol. 84(C).
    9. Rao, Lanlan & Zhou, Liyun, 2019. "The role of stock price synchronicity on the return-sentiment relation," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 119-131.
    10. Huang, Jiexiang & Roberts, Helen & Tan, Eric K.M., 2024. "Media uncertainty and risk-taking," International Review of Financial Analysis, Elsevier, vol. 91(C).
    11. Shahzad, Syed Jawad Hussain & Hernandez, Jose Areola & Rehman, Mobeen Ur & Al-Yahyaee, Khamis Hamed & Zakaria, Muhammad, 2018. "A global network topology of stock markets: Transmitters and receivers of spillover effects," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 492(C), pages 2136-2153.
    12. Gaganis, Chrysovalantis & Leledakis, George & Pasiouras, Fotios & Pyrgiotakis, Emmanouil, 2021. "National culture of secrecy and stock price synchronicity: Cross-country evidence," MPRA Paper 105432, University Library of Munich, Germany.
    13. Ahmed, Mohamed Shaker & Kumar, Satish & Gupta, Prashant & Bamel, Nisha, 2024. "CEO media coverage and cash holdings," International Review of Financial Analysis, Elsevier, vol. 91(C).
    14. Can Huang & Yuqiang Cao & Meiting Lu & Yaowen Shan & Yizhou Zhang, 2023. "Messages in online stock forums and stock price synchronicity: Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(3), pages 3011-3041, September.
    15. Fu, Yishu & Liu, Chunbo & Qin, Zhenjiang, 2021. "Does CEO-chairman dialect similarity affect stock price informativeness for Chinese listed firms?," The North American Journal of Economics and Finance, Elsevier, vol. 55(C).
    16. Ouidad Yousfi & Nadia Loukil, 2024. "Environmental laws in France: What are the effects of the Grenelle laws on firms?," European Journal of Law and Economics, Springer, vol. 57(3), pages 347-389, June.
    17. Wu, Yanghui, 2023. "Banking competition and stock price crash risk," Finance Research Letters, Elsevier, vol. 58(PB).
    18. He, Feng & Liu, Guanchun & Hao, Jing & Li, Youwei, 2023. "CSR performance and firm idiosyncratic risk in a data-rich environment: The role of retail investor attention," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 89(C).
    19. Dong, Guangwu & Tian, Chengrun & Wang, Xining & Wang, Sanchuan, 2024. "Analyst coverage and corporate financing," Finance Research Letters, Elsevier, vol. 59(C).
    20. Tzomakas, Christos & Anastasiou, Dimitrios & Katsafados, Apostolos & Krokida, Styliani Iris, 2023. "Crisis sentiment and banks’ stock price crash risk: A missing piece of the puzzle?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 87(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecofin:v:74:y:2024:i:c:s1062940824001785. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620163 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.