Whether Enterprise Digital Transformation Can Restrain Asset Mispricing?

Asset mispricing is a capital market anomaly where asset prices deviate from value.Whether it is an overvalued bubble during a high market or an undervalued price during an economic downturn,it will interfere with investors’ decision-making judgments,thus causing a reduction in the efficiency of resource allocation in the capital market and laying a hidden danger for the healthy development of the capital market,which will also be transmitted to the real economy and have a negative impact on economic development.China’s capital market is still immature and the volatility of capital market prices is exacerbated by the structure of retail investors.In order to stabilize the capital market and prevent and mitigate major financial risks,it is necessary to pay more attention to the problem of asset mispricing.The existence of asset mispricing is not only related to the shortcomings of the market itself,but is also heavily influenced by the behavior of companies,yet existing research has limited literature that explores the issue from an intra-firm perspective.Digital transformation,the latest direction of strategic change in companies today,systematically affects the operating models and governance mechanisms of companies.On the one hand,digital transformation improves the internal and external information environment of companies,which can provide a basis for investors to make more accurate pricing decisions and reduce the bias in asset pricing;on the other hand,the information of digital transformation is also stimulating investors’ emotions and influencing their expectations of the company’s prospects,amplifying the irrational side of investors and increasing the level of asset mispricing.Therefore,does digital transformation reduce the level of asset mispricing,or does it contribute to asset mispricing bias?No research has yet answered this question.To address the above questions,this paper,based on asset pricing theory,information asymmetry theory,limited rationality theory and signaling theory,selects financial data and textual analysis data of A-share listed companies in Shanghai and Shenzhen from 2010 to 2021 through both literature research method and empirical analysis method,and systematically examines the impact of digital transformation of enterprises on asset mispricing,its mechanism of action and its relationship with the external environment.The interaction with the external environment.This paper finds that:(1)digital transformation,as a strategic change within a company,can improve the asymmetry of information in the capital market by increasing the comparability and reliability of accounting information,reduce the deviation of asset prices from the intrinsic value of the company,enable asset prices to better reflect asset values,and improve the efficiency of capital market pricing.This finding reveals that the implementation of digital transformation has positive social value and positive externalities.(2)There is heterogeneity in the impact of digital transformation on asset mispricing,as evidenced by the fact that digital transformation is more able to mitigate the extent of asset mispricing in the case of underpricing,while it has a better inhibiting effect on asset mispricing in non-state enterprises,suggesting that digital transformation of enterprises can improve the efficiency of resource allocation in the capital market.(3)Media attention weakens the relationship between digital transformation and asset mispricing because increased media attention triggers a herding effect among investor groups,amplifying investor sentiment and making it difficult to fully exploit the information effect of digital transformation.In a situation of environmental uncertainty,the information effect of digital transformation can be highlighted and the level of asset mispricing significantly reduced as the information asymmetry in capital markets increases.This paper is innovative in that it enriches the literature on asset mispricing from the internal perspective of companies,and builds a complete analysis system covering the macro environment,companies,market intermediaries and investors;in addition,this paper explores the external effects of digital transformation,and confirms through empirical testing that digital transformation plays a beneficial role in improving the comparability and reliability of accounting information,which is essential for building an effective The paper also explores the external effects of digital transformation.The findings of this study can provide empirical evidence for the government to promote the integration of digital technology with the real economy to achieve high-quality development;at the same time,in the current time of weakening expectations and increasing downward pressure on the economy,this paper confirms that the digital transformation of enterprises is more conducive to alleviating the problem of under-pricing and more valuable in an uncertain environment,which can also provide a reference for releasing the dividends of digital transformation and helping to build an effective capital market.