Does the Market Value Corporate Digital Transformation? From the Perspective of Internal Control and Digital Innovation

Amid rapid advances in digital technologies, the digital economy has become a central engine of global growth. Corporate digital transformation has thus become imperative for survival and development, yet how capital markets price such efforts remains unclear. Using Chinese A-share listed firms from 2011 to 2023, we employ ordinary least squares (OLS) regressions to examine the impact of digital transformation on firm market value and the mechanisms involved. We document a significant positive association between digital transformation and firms’ market value. Mechanism analyses reveal two channels—optimized internal control and promoted digital innovation—through which the transformation raises valuation. Further investigations observe a more pronounced enhancement effect for firms with higher sensitivity to digital technologies and non-state ownership, as well as for firms located in regions with more mature digital infrastructure or stronger intellectual property protection. Our study advances the micro-level understanding of the digital economy and informs the optimization of firms’ digital transformation strategies and the design of targeted, context-aware pro-digital policies.