{"title":"Enterprise digital transformation and return comovement of business groups","authors":"Shasha Liu , Yifan Jin , Dongmin Kong","doi":"10.1016/j.pacfin.2024.102555","DOIUrl":null,"url":null,"abstract":"<div><div>This paper investigates the impact of enterprise digital transformation on the capital market information efficiency. Specifically, we explore the effects of digital transformations on the comovement of stock prices between firms and their affiliated business group entities. Our results underscore a significant reduction in price-based return comovement for firms within the same business groups after digital transformation, indicating an improvement in information efficiency of capital market. Our findings exhibit more pronounced pattern among firms with higher level of diversification, those experiencing higher performance volatility, stronger financing constraints, and higher information asymmetry. The potential mechanism is associated with the enhancement of firms' resilience against adverse shocks and firms' access to external financing, thereby decreasing firms' dependence on the internal capital market of business groups.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"88 ","pages":"Article 102555"},"PeriodicalIF":4.8000,"publicationDate":"2024-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Pacific-Basin Finance Journal","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0927538X2400307X","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This paper investigates the impact of enterprise digital transformation on the capital market information efficiency. Specifically, we explore the effects of digital transformations on the comovement of stock prices between firms and their affiliated business group entities. Our results underscore a significant reduction in price-based return comovement for firms within the same business groups after digital transformation, indicating an improvement in information efficiency of capital market. Our findings exhibit more pronounced pattern among firms with higher level of diversification, those experiencing higher performance volatility, stronger financing constraints, and higher information asymmetry. The potential mechanism is associated with the enhancement of firms' resilience against adverse shocks and firms' access to external financing, thereby decreasing firms' dependence on the internal capital market of business groups.
期刊介绍:
The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.