Digital finance and stock price crash risk

Ai, Yongfang; Sun, Guanglin; Kong, Tao

doi:10.1016/j.iref.2023.07.003

Cited by 15 publications

(2 citation statements)

References 24 publications

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“…The second group addresses investment and financial endeavors, encompassing cash reserves [5], corporate innovation [30], financialization [31], capital structure [32], and financial distress [33]. The third group relies on capital market responses which involve stock crash risk [34], stock volatility [35], and liquidity creation [36]. The fourth group closely associates with stakeholders, covering supply chain innovation [37], knowledge transfer [38], consumer value creation [39], and organization governance [40].…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Role of Digital Transformation on Carbon Performance: Evidence from Firm-Level Analysis in China

Guo,

Huang

2023

Sustainability

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The continuous proliferation of the global digital wave has increased the contribution of firms’ digital transformation as a vital force propelling economic growth and sustainable development, highlighting the importance of digital transformation and the environment. However, only limited studies focused on how digital transformation influences carbon performance. To fill in this gap, this study investigates the impact of digital transformation on corporate carbon performance using a sample of 2286 Chinese A-share listed firms from 2008 to 2020 and employs the ordinary least squares (OLS) model as the principal research methodology. According to the results, the adoption of digital transformation strategies by firms exhibits a notable capacity to enhance carbon performance, which holds after a series of robustness tests. Green technology innovation and total factor productivity exhibit a partially mediating influence on the relationship between digital transformation and carbon performance. Further analyses reveal that enhanced green management practices and government subsidies have the potential to further amplify this positive effect. However, the impact is diminished by financing constraints and political connections. The findings of this research hold significance for firms striving for sustainable development within the era.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Role of Digital Transformation on Carbon Performance: Evidence from Firm-Level Analysis in China

Guo,

Huang

2023

Sustainability

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“…Transformative and innovative digital transformation behaviors and the resulting improvements in operational efficiency and economic performance have overwhelming advantages in the capital market [ 5 ], offering a wealth of information for the adjustment of capital market resource allocation, but they also present challenges to corporate governance [ 6 ]. Existing literature has also verified the impact of digital transformation on the capital market from different perspectives, such as the ability of enterprise digital transformation to improve the capital market environment [ 7 ], inhibit the risk of stock price crash [ 8 ], and reduce stock price volatility [ 9 ]. In conclusion, the external capital market effects of enterprise digital transformation have yet to be fully explored, particularly in terms of in-depth mechanism analysis, which is primarily manifested in the important capital market factor of stock liquidity.…”

Section: Introductionmentioning

confidence: 99%

Enterprise digital transformation’s impact on stock liquidity: A corporate governance perspective

Liu,

Zhu,

Cheng

2024

PLoS ONE

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The innovation in technology and economic growth, which are brought about by digital transformation in enterprises, will inevitably impact their performance in the capital market. Using a sample of Chinese A-share listed companies from 2012 to 2021, this study extensively examines the impact, mechanism, and economic consequences of enterprises digital transformation on stock liquidity. The research reveals that enterprises digital transformation can significantly improve stock liquidity. From the perspective of corporate governance, a further analysis indicates that the digital transformation of enterprises can improve stock liquidity by three mechanisms: easing financing constraints, improving the quality of internal control, and enhancing information disclosure. The results of the heterogeneity analysis indicate that the digital transformation of enterprises, combined with a high level of financial technology, developed financial markets, and policy guidance, has a significantly more significant effect on improving stock liquidity. The analysis of economic consequences reveals that the digital transformation of enterprises can lower the risk of a stock price crash and enhance the accuracy of analysts’ forecasts, primarily by improving stock liquidity. This study offers empirical evidence from a micro-mechanism perspective that elucidates the spillover effect of enterprise digital transformation on the capital market. It provides insight into the impact of enterprise digital transformation on stock liquidity and offers theoretical guidance to promote the adoption of enterprise digital transformation across different countries and enhance stock liquidity in the capital market.

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Can digital M&A reduce the stock price crash risk?

Guan,

Wen

2024

Int. J Fin Econ

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With the rapid development of the digital economy, digital mergers and acquisitions (M&A) have become essential means for enterprises to acquire digital technologies and accelerate their digital transformation. This paper examines the impact of digital M&A on stock price crash risk using a sample of M&A transactions of China A‐share listed companies from 2010 to 2021. The results show that digital M&A can reduce stock price crash risk after M&A. Further discussions reveal that compared to non‐digital M&A, digital M&A has a better market effect, and the target firms of digital M&A generally are in different industries from the acquirers, have relatively low registered capital, have a shorter registration time, and have better financial performance. Mechanism tests indicate that during the transaction, digital M&A increases the probability of signing earnout contracts and reduces the cash payment ratio. After the transaction, digital M&A increases research and development (R&D) investment and improves R&D investment efficiency, ultimately reducing stock price crash risk. Cross‐sectional tests suggest that in situations with intense market competition, lower digitalization level of the acquirers, and higher business similarity between the acquirer and the target firm, digital M&A is more effective in reducing stock price crash risk. The findings enrich the research on the operational mechanisms and economic consequences of digital M&A, providing theoretical references for regulatory authorities to optimise M&A regulatory policies and for enterprises to assess the benefits and risks of digital M&A.

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Digital finance and stock price crash risk

Cited by 15 publications

References 24 publications

Role of Digital Transformation on Carbon Performance: Evidence from Firm-Level Analysis in China

Role of Digital Transformation on Carbon Performance: Evidence from Firm-Level Analysis in China

Enterprise digital transformation’s impact on stock liquidity: A corporate governance perspective

Can digital M&A reduce the stock price crash risk?

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