Disciplining effects of data asset disclosure on corporate financial reporting quality

Xinxian Chen, Rui Xian and Lingyu Huang

Asian Review of Accounting, 2026, vol. 34, issue 4, 766-791

Abstract: PurposeThis study investigates the relationship between data asset disclosure and financial reporting quality (FRQ).Design/methodology/approachThis study conducts a multivariate analysis on a panel dataset of Chinese listed companies from 2005 to 2023 to examine the impact of data asset disclosure on FRQ.FindingsThe empirical results demonstrate a positive relationship between data asset disclosure and FRQ. This result is consistent with the disciplining effects of data asset disclosure, indicating less earnings management at higher levels of data asset disclosure. Mechanism exploration suggests that this effect primarily arises from improved internal control effectiveness, compressed manager opportunism, and enhanced external monitoring. Moreover, the impact is more pronounced in firms that own advanced digital technology capabilities, such as high levels of digitalisation, AI implementation, top management team IT skills, innovation, government subsidies, and operation in data-intensive industries.Originality/valueFirst, this research contributes to the growing literature on the beneficial effects of cutting-edge digital technology drivers on firms' FRQ by providing a novel perspective on data assets. Second, our findings enrich the literature on firms' disclosure of intangible resources, highlighting the role of narrative disclosure on data assets and the implications of FRQ. Third, the mechanism by which the disclosure of data assets functions is also revealed. We present a dual-path framework of data asset disclosure, highlighting that both internal control improvement and increased market scrutiny lead to an improvement in FRQ.

Keywords: Data assets; Financial reporting quality; Internal control; Market monitoring (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arapps:ara-09-2025-0310

DOI: 10.1108/ARA-09-2025-0310

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