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Digital transformation and corporate fraud: Evidence from China

Author

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  • Lu, Chao
  • Zhao, Yiwen
  • Xing, Kai
  • Liu, Jinxin

Abstract

This study examines the impact of digital transformation on corporate fraud using a sample of Chinese A-share listed companies from 2007 to 2022. The results show that digital transformation increases the propensity for and frequency of corporate fraud. Mechanism analysis reveals corporate performance, internal controls, external supervision difficulty and executive age drive this effect. Heterogeneity analysis reveals that the effect is more salient for firms with high financing constraints, lower competitive positions, lower external audit quality, and lower executive compensation. Overall, this study enriches research in the field of digital transformation and corporate fraud and provides empirical evidence on how to protect investors' interests and maintain capital market stability.

Suggested Citation

  • Lu, Chao & Zhao, Yiwen & Xing, Kai & Liu, Jinxin, 2025. "Digital transformation and corporate fraud: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:finana:v:106:y:2025:i:c:s1057521925005630
    DOI: 10.1016/j.irfa.2025.104476
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    JEL classification:

    • G0 - Financial Economics - - General

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