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Digital transformation and risk of share price crash: Evidence from a new digital transformation index

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  • Zhu, Shuo
  • Gao, Jun
  • Chen, Kaijun

Abstract

Digital transformation has become a key initiative for firms’ sustainable development. Based on the annual reports of A-share listed companies, we use LDA model to construct a novel measure of firm digital transformation and examine its effect on the risk of stock price crash. We find that firm digital transformation significantly affects the risk of stock price crash. We then show that information asymmetry and firm performance are underlying mechanisms. Further, heterogeneity analyses show that the ownership and the degree of technology moderate our findings. This paper provides policy implications on the development of digital economy and capital markets.

Suggested Citation

  • Zhu, Shuo & Gao, Jun & Chen, Kaijun, 2023. "Digital transformation and risk of share price crash: Evidence from a new digital transformation index," Finance Research Letters, Elsevier, vol. 58(PB).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323007754
    DOI: 10.1016/j.frl.2023.104403
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    References listed on IDEAS

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    Cited by:

    1. Wang, Pengmian & Zhao, Tao, 2024. "Impact of population aging on corporate digital transformation strategies: An empirical investigation based on population census data from various provinces in China," Finance Research Letters, Elsevier, vol. 67(PA).
    2. Yang, Jie & Ying, Limeng & Xu, Xiaofang, 2024. "Digital transformation and accounting information comparability," Finance Research Letters, Elsevier, vol. 61(C).

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