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Corporate strategic digital orientation and stock price crash risk: evidence from firm life cycle stages

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  • Maqsood, Umer Sahil
  • Li, Qian
  • Younas, Muhammad Waleed
  • Amjad, Fiza

Abstract

While prior research frequently explores the impact of digital transformation on various aspects of corporate operations, there is limited understanding of how specific digital strategies, such as corporate strategic digital orientation (SDO) influence firm-level risks like stock price crash risk (SPCR). Understanding this relationship is crucial, as SPCR poses significant threats to market stability and investor confidence. This study fills this critical gap by addressing the ambiguity in measuring digital transformation and examines how firm SDO affects SPCR using data from China A-share listed firms from 2007 to 2021. The findings show that adopting firm SDO significantly reduces SPCR, with the effect lasting 3–5 years post-implementation. A dual-channel analysis reveals that firm SDO enhances internal control and alleviates financing constraints, thereby lowering SPCR. The reduction in SPCR is more pronounced during a firm’s growth and maturity stages than during its introduction and decline stages. Further analysis indicates that the impact of SDO on SPCR is stronger in regions with advanced financial technology (fintech) development and in technology-oriented firms. The primary results remain robust across alternative SDO measures, instrumental variable approaches and propensity score matching techniques.

Suggested Citation

  • Maqsood, Umer Sahil & Li, Qian & Younas, Muhammad Waleed & Amjad, Fiza, 2026. "Corporate strategic digital orientation and stock price crash risk: evidence from firm life cycle stages," Journal of Business Research, Elsevier, vol. 206(C).
    • Handle: RePEc:eee:jbrese:v:206:y:2026:i:c:s0148296325007714
    DOI: 10.1016/j.jbusres.2025.115948
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