Purpose This study aims to investigate the effect of digital transformation on accounting conservatism, emphasizing the moderating role of industry type in an emerging market context. Focusing on Egypt, it examines whether differences in sectoral digital maturity shape how technological adoption influences conservative financial reporting practices, thereby highlighting the importance of institutional and operational heterogeneity across industries. Design/methodology/approach Drawing on signaling theory, agency theory and the resource-based view, the study employs a quantitative research design using panel data from non-financial firms listed on the Egyptian Exchange (EGX) over the period 2019–2023. The empirical analysis relies on multivariate regression models to test the direct effect of digital transformation and its interaction with industry characteristics. To address potential endogeneity concerns, the study applies two-step System GMM estimations, ensuring robust and reliable inferences. Findings The results indicate that digital transformation is positively associated with accounting conservatism. This relationship is significantly stronger in industries characterized by higher levels of digital maturity, suggesting that sectoral readiness conditions the extent to which firms can translate digital investments into improved governance outcomes. Overall, industry digital maturity amplifies the conservatism-enhancing effect of digital transformation. Practical implications The findings suggest that managers can strengthen conservative reporting and internal control systems through targeted digital investments. Regulators and auditors should account for industry-specific digital maturity when evaluating reporting quality and disclosure risk. Firms in technology-intensive sectors may gain particular benefits from prioritizing advanced digital capabilities aligned with governance objectives. Social implications By enhancing transparency and reducing information asymmetry, digital transformation supports accountability and investor confidence, which is especially critical in emerging markets with developing institutional frameworks. Originality/value This study contributes to the accounting literature by introducing industry type as a moderating factor in the digital transformation–conservatism nexus and by employing advanced GMM techniques. It offers context-sensitive evidence from Egypt and extends conservatism research through the use of digitalization measures derived from content analysis.
Elfedawy et al. (Tue,) studied this question.