Does corporate digitalization improve disclosure quality?

Abstract

Purpose

This study investigates the potential association between corporate digitization and disclosure quality, and how this relationship is moderated by non-state ownership and institutional environment.

Design/methodology/approach

Drawing on signaling theory and factors that affect disclosure quality, the authors developed a framework to study how corporate digitization is associated with disclosure quality. The proposed framework was empirically tested using a comprehensive analysis that integrated corporate-level data on digitalization, disclosure quality, and ownership structure, with regional-level data on the institutional environment. The authors employed linear panel regression models with fixed effects.

Findings

The authors found that corporate digitization is significantly and positively associated with higher disclosure quality. This positive association is particularly pronounced for non-state-owned enterprises compared to state-owned enterprises. Additionally, an improvement in the institutional environment strengthens the positive relationship between digitization and disclosure quality.

Originality/value

This work contributes to the literature on corporate digitization by empirically investigating its impact on disclosure quality. The study also extends previous research by considering the moderating roles of ownership structure and institutional environment on the digitization-disclosure quality relationship.