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Digital transformation and earnings opacity:Evidence from China

Author

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  • Liu, Wanli

Abstract

This study finds that digital transformation has a significant negative impact on firms’ earnings aggressiveness, earnings smoothing and earnings opacity mainly by strengthening constraints on management’s power and private information. Further analysis reveals that in firms operating internationally, the top ten audited firms, and non-state-owned firms, the role of digital transformation in reducing earnings opacity is significant and greater, while in non-top ten audited companies, the main effect is not significant, and digital transformation can only reduce the earnings smoothing for state-owned firms. This study hence suggests an important new determinant of earnings opacity.

Suggested Citation

  • Liu, Wanli, 2024. "Digital transformation and earnings opacity:Evidence from China," Finance Research Letters, Elsevier, vol. 69(PA).
    • Handle: RePEc:eee:finlet:v:69:y:2024:i:pa:s1544612324010547
    DOI: 10.1016/j.frl.2024.106024
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    More about this item

    Keywords

    Digital transformation; Earnings opacity; Earnings aggressiveness; Earnings smoothing;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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