How digital technology improves the high-quality development of enterprises and capital markets: A liquidity perspective

This paper finds that the digitalization has a positive impact on stock liquidity, especially those lack analyst follow-up or low online media attention. We use Made in China 2025 as an exogenous shock to conduct difference-in-differences estimation to improve causality. We discuss a possible mechanism based on classical information asymmetry theory. Our results are robust to a battery of tests based on different specifications and alternative measures. Overall, this research evaluates the significance of digital transformation for enterprises and has implications for enhancing capital market liquidity.

Automated summary

This paper finds that digitalization has a positive impact on stock liquidity, especially for stocks with low analyst follow-up or online media attention. The study uses Made in China 2025 as an exogenous shock and employs difference-in-differences estimation to establish causality. The research discusses a potential mechanism based on classical information asymmetry theory. The results are robust across various tests and measures, highlighting the significance of digital transformation for enterprises and its implications for enhancing capital market liquidity.