Corporate digital transformation and idiosyncratic risk: Based on corporate governance perspective
Corporate digital transformation and idiosyncratic risk: Based on corporate governance perspective
This study examines the relationship between corporate digital transformation and idiosyncratic risk. We employ crawler technology to gather “digital transformation” characteristic words in annual reports, and innovatively construct a proxy variable for corporate digital transformation. Using 12,516 observations from 2941 listed companies in China across the period 2014 to 2020, we find that the relationship between corporate digital transformation and idiosyncratic risk presents as “U-shaped”. The results are still robust when we address the endogeneity concern, and use alternative measures of the dependent variable, further validate the U-shaped relationship as well as exclude special samples. The moderating effect of management shareholding and product market competition is further explored from internal and external corporate governance mechanisms, respectively. Results show that internal and external corporate governance mechanisms strengthen the relationship between digital transformation and idiosyncratic risk. In general, our research results enrich the study of corporate digital transformation and risk management, which gives some insight into corporate governance in the digital age.
Corporate governance, Digital transformation, Idiosyncratic risk, Textual analysis
Huang, Heshu
c99925c4-4fa3-48d7-8e35-ed56a9c407c9
Wang, Caiting
2106498e-96fc-4d44-b9d3-ac223a603b5b
Wang, Liukai
1ea2c3e6-95e6-4912-952a-54a53e2da059
Yarovaya, Larisa
2bd189e8-3bad-48b0-9d09-5d96a4132889
September 2023
Huang, Heshu
c99925c4-4fa3-48d7-8e35-ed56a9c407c9
Wang, Caiting
2106498e-96fc-4d44-b9d3-ac223a603b5b
Wang, Liukai
1ea2c3e6-95e6-4912-952a-54a53e2da059
Yarovaya, Larisa
2bd189e8-3bad-48b0-9d09-5d96a4132889
Huang, Heshu, Wang, Caiting, Wang, Liukai and Yarovaya, Larisa
(2023)
Corporate digital transformation and idiosyncratic risk: Based on corporate governance perspective.
Emerging Markets Review, 56, [101045].
(doi:10.1016/j.ememar.2023.101045).
Abstract
This study examines the relationship between corporate digital transformation and idiosyncratic risk. We employ crawler technology to gather “digital transformation” characteristic words in annual reports, and innovatively construct a proxy variable for corporate digital transformation. Using 12,516 observations from 2941 listed companies in China across the period 2014 to 2020, we find that the relationship between corporate digital transformation and idiosyncratic risk presents as “U-shaped”. The results are still robust when we address the endogeneity concern, and use alternative measures of the dependent variable, further validate the U-shaped relationship as well as exclude special samples. The moderating effect of management shareholding and product market competition is further explored from internal and external corporate governance mechanisms, respectively. Results show that internal and external corporate governance mechanisms strengthen the relationship between digital transformation and idiosyncratic risk. In general, our research results enrich the study of corporate digital transformation and risk management, which gives some insight into corporate governance in the digital age.
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More information
Accepted/In Press date: 30 May 2023
e-pub ahead of print date: 10 June 2023
Published date: September 2023
Additional Information:
Funding Information:
The authors gratefully acknowledge financial support from the China Postdoctoral Science Foundation (Grant No. 2021M700380) and the Fundamental Research Funds for the Central Universities (Grant No. FRF-DF-20-11).
Publisher Copyright:
© 2023 Elsevier B.V.
Keywords:
Corporate governance, Digital transformation, Idiosyncratic risk, Textual analysis
Identifiers
Local EPrints ID: 478706
URI: http://eprints.soton.ac.uk/id/eprint/478706
ISSN: 1566-0141
PURE UUID: e1e6c7c0-549f-4379-8921-16f188e9557b
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Date deposited: 07 Jul 2023 16:41
Last modified: 18 Mar 2024 03:50
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Contributors
Author:
Heshu Huang
Author:
Caiting Wang
Author:
Liukai Wang
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