Digital Transformation and News Sentiment

Jia Liu, Min Hua, Tianyi Wang and Lu-Jui Chen

Emerging Markets Finance and Trade, 2025, vol. 61, issue 14, 4351-4365

Abstract: It is unclear whether adopting digital transformation in firms can affect media tone. This paper investigates the impacts of corporate digital transformation on news sentiment about the firms. We use Cloud Natural Language API to capture the sentiment of textual news content about the Chinese public listed firms. Our main finding indicates corporate digital transformation improves news sentiment about firms. We also find that digital transformation leads to better news sentiment by improving firms’ innovative and financial performance. In addition, our heterogeneity analysis suggests that the effects of DT on firms’ news sentiment are stronger for state-owned firms, firms with high institutional ownership and small-sized firms. Finally, we show that the effects of digital transformation are stronger for firms located in undeveloped areas and belong to high-tech industries. Our paper provides implications for firms and managers about the non-economic consequences when they make decisions.

Date: 2025
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DOI: 10.1080/1540496X.2025.2513346

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