Digital transformation and earnings opacity:Evidence from China

Wanli Liu

Finance Research Letters, 2024, vol. 69, issue PA

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.

Keywords: Digital transformation; Earnings opacity; Earnings aggressiveness; Earnings smoothing (search for similar items in EconPapers)
JEL-codes: D21 M41 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:69:y:2024:i:pa:s1544612324010547

DOI: 10.1016/j.frl.2024.106024

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