Exploring the Impact of Digital Transformation on Corporate Violations in China’s A-Share Market

Abstract

Illegal and irregular behavior restricts the development of listed companies. Digital technology provides new opportunities for corporate governance, including the management of corporate violations, and companies are utilizing the “digital express” to achieve organizational restructuring and innovations in governance. In this study, the aim was to clarify whether digital transformation can disincentivize corporate violations in an environment where legal constraints remain inadequate. Therefore, samples of China’s A-share-listed companies were used from 2013 to 2022, including a fixed-effects model to explore the impact of digital transformation on corporate violations. In this study, digital transformation is identified as significantly curbing the incidence of corporate violations. The moderating mechanism test shows that audit quality, analyst attention, and negative media reports all strengthen the inhibitory effect of digital transformation on corporate violations to varying degrees. Heterogeneity analysis identifies that the inhibitory effect of digital transformation on corporate violations is more pronounced in non-SOEs, large firms, and the manufacturing sector. In this study, the inhibitory effect of digital transformation on corporate violations is revealed, and the relevant literature on digital technology in the field of corporate governance is enriched, providing empirical references to promote the digital construction and healthy and compliant development of commercial enterprises.