Digital Economy and Stock Price Crash Risk: The Mediating Roles of Digital Transformation and Agency Efficiency

Within a digital economic framework, investors can access information more easily, narrowing information gaps across internal and external stakeholders, and mitigating information asymmetry in the financial market. Using data from 2013 to 2023 for Chinese A-share listed firms on the Shenzhen and Shanghai Stock Exchanges, this study examines the effects of the digital economy on stock price crash risk. The results show that the digital economy significantly reduces stock price crash risk. Specifically, a one standard deviation rise in the digital economy results in an approximately 10% decline in share price crashes. This result is still robust after resolving endogeneity concerns and conducting extensive robustness tests. Further tests indicated that the digital economy mitigates crash risk by promoting digital transformation and improving agency efficiency. In addition, heterogeneity analyses reflect that the mitigating role of the digital economy is more pronounced for enterprises located in areas with better-developed digital infrastructure, enterprises receiving greater government attention, and firms without internal control deficiencies.