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Management incentives, governance, and digital transformation: effects on financial disclosure integrity

Author

Listed:
  • Yali Li

    (Zhengzhou University of Aeronautics)

  • Gaobin Du

    (Zhengzhou University of Aeronautics)

  • Yilun Lu

    (The University of Texas)

Abstract

This study investigates the impact of digital transformation on the integrity of financial information disclosure among firms listed on the Shanghai and Shenzhen A-share markets. Leveraging a comprehensive dataset spanning from 2011 to 2021, we employ an ordered probit regression model to analyze the relationship between digital transformation and disclosure practices. Our findings reveal that digital transformation significantly enhances the integrity of financial disclosures, primarily through improved management incentives and strengthened internal governance mechanisms. These effects are particularly pronounced in non-state-owned enterprises, firms in central and western regions, and those operating within weaker legal frameworks. The results underscore the role of digital transformation as a critical driver of transparency in financial markets, with implications for corporate governance, regulatory oversight, and investor protection.

Suggested Citation

  • Yali Li & Gaobin Du & Yilun Lu, 2025. "Management incentives, governance, and digital transformation: effects on financial disclosure integrity," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 49(4), pages 1115-1145, December.
    • Handle: RePEc:spr:jecfin:v:49:y:2025:i:4:d:10.1007_s12197-025-09736-8
    DOI: 10.1007/s12197-025-09736-8
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    Keywords

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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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