Stock Market Reactions to Data Assets Recognition in Firm Financial Reports

In August 2023, the Ministry of Finance initially proposed guidelines for the identification and accounting treatment of data assets. From the perspective of stock market reactions, this study analyzes the theoretical significance of the data assets recognition in firm financial reports and evaluates its policy effects. Text analysis is used to determine whether a firm has data assets based on data from Chinese A-share listed firms. The event study method is then used to determine that, following the announcement of the Interim Provisions, firms with data assets will experience a more positive market reaction than those without data assets, and the conclusion passes the robustness test. It demonstrates investors are optimistic about the entry of firm data assets into the Financial Statements. Investors think it will benefit shareholders by raising the firm value and more accurately reflecting its current state. Further analysis reveals that firms with lower audit quality, lower institutional investor shareholdings, and fewer analysts to follow, will experience a more positive market reaction. The conclusions of this study provide a relevant basis and reference for further promoting the reform of data assets entry into the Financial Statements.