Will Digital Transformation Affect Corporate Financial Restatements？
Publication Date: 24/06/2025
Author(s): Qianwen Sun, Xunchun Sun.
Volume/Issue: Volume 5, Issue 2 (2025)
Page No: 143-153
Journal: Journal of Advanced Research and Multidisciplinary Studies (JARMS)
Abstract:
With the rapid development of digital technology, digital transformation has become an important driving force for enterprise development, bringing new challenges and opportunities to corporate governance. This study empirically examines the impact of digital transformation on financial restatements by analyzing a sample of non-financial listed companies on the Shanghai and Shenzhen A-share markets in China from 2011 to 2020. The results show that digital transformation significantly reduces the likelihood of financial restatements through three main mechanisms: improving the quality of internal control, reducing information asymmetry, and enhancing executive compensation incentives. Further analysis indicates that the inhibitory effect of digital transformation on financial restatements is more pronounced in state-owned enterprises, high-tech companies, and those with prominent agency problems. This study provides valuable references for improving corporate governance practices in Chinese enterprises.
Keywords:
Digital transformation, Financial restatements.
