Enterprise digital transformation and stock price volatility: from the perspective of information asymmetry

This paper investigates the impact of enterprise digital transformation on stock price volatility. Using a 2016–2024 panel of Chinese A-share listed firms, we find that firms undergoing more extensive digital transformation exhibit significantly lower levels of stock price volatility. This positive effect is more pronounced when firms are privately owned, headquartered in eastern China, operate in less competitive industries, and are audited by a Big Four accounting firm. Channel tests reveal that digital transformation mitigates stock price volatility through improving information disclosure quality, increasing analyst coverage, and enhancing media attention. Further analysis shows that only substantive digital transformation mitigates stock price volatility. Overall, this study sheds light on the critical role of digital transformation in shaping key capital market outcomes, particularly stock price volatility.