Digital transformation and corporate risk taking: Evidence from China

Companies' risk preference and risk performance, which reflect their inclination to seek higher returns, significantly influence their decisions and behaviors. The current development of digital transformation is an effective strategy to improve enterprises' competitiveness. Studies have earlier examined the functions of digitalization, such as improving business operations and efficiency. Using data from 2847 listed companies in China from 2011 to 2019, this study examines the extent of digital transformation in enterprises and its impact on their risk performance behavior. The results show that digital transformation significantly improves enterprises' risk performance. Mechanism testing shows that optimized corporate governance processes and increased investment in research and innovation act as positive intermediaries through which digitalization affects the level of corporate risk performance. These findings contribute to our understanding of the role of enterprises' digital transformation behavior and recommend relevant policies to facilitate a more effective path for enterprise development and reform.