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Is digital finance always beneficial to accounting information transparency? Evidence from China

Author

Listed:
  • Xingqiang Du
  • Jing Hong
  • Hexin Tao
  • Yongkui Zhang

Abstract

Using a sample of Chinese listed firms over 2011–2020, this study examines the impact of digital finance on accounting information transparency. Our findings reveal an inverted U-shaped relationship between digital finance and accounting information transparency, suggesting that digital finance within certain limits increases accounting information transparency by optimising information acquisition and processing, but excessive digital finance leads to information overload and impairs accounting information transparency. Our findings are robust to a variety of sensitivity tests and are still valid after using two-stage “shift-share” instrumental variable procedures, propensity score matching method and firm-level fixed effect regression to control for the endogeneity issue. Lastly, MD&A and annual reporting disclosure timeliness are two influential channels by which digital finance affects accounting information transparency, and further the inverted U-shaped relationship is more pronounced for firms in provinces with lower marketisation indexes (CEO-chairman duality) than for their counterparts.

Suggested Citation

  • Xingqiang Du & Jing Hong & Hexin Tao & Yongkui Zhang, 2024. "Is digital finance always beneficial to accounting information transparency? Evidence from China," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 12(2), pages 276-310, April.
    • Handle: RePEc:taf:rcjaxx:v:12:y:2024:i:2:p:276-310
    DOI: 10.1080/21697213.2024.2347234
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