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The dark side of corporate digital transformation: Evidence from excess perk consumption of executives

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  • Wu, Jinghua
  • Liang, Yanping
  • Liu, Wei

Abstract

We investigate the effect of corporate digital transformation on the excess perk consumption of executives (henceforth, excess perk consumption) using a sample of Chinese listed companies from 2010 to 2021. The results show that corporate digital transformation increases excess perk consumption by aggravating information asymmetry between insiders and outsiders, and by increasing business complexity. Cross-sectional analyses show that the effect of corporate digital transformation on excess perk consumption is stronger in firms with higher managerial power, state-owned enterprises, and high-tech firms. Our study provides new insights into the digital transformation paradox and has policy implications for regulators and enterprises.

Suggested Citation

  • Wu, Jinghua & Liang, Yanping & Liu, Wei, 2024. "The dark side of corporate digital transformation: Evidence from excess perk consumption of executives," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s1544612324000631
    DOI: 10.1016/j.frl.2024.105033
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    1. Fan, Xueyuan & Zhao, Shukuan & Shao, Dong & Wang, Shuang & Zhang, Bochen, 2024. "Talking and walking: Corporate digital transformation and government subsidies," Finance Research Letters, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    Corporate digital transformation; Excess perk consumption of executives; Information asymmetry; Business complexity; Digital transformation paradox;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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