How Does the Development of Fintech Affect Stock Mispricing?

Solving the widespread mispricing problem in the capital market is an important prerequisite for the stable and healthy operation of China’s financial industry. This article fully considers the typical facts of digital technology innovation and integration in China’s financial sector, and focuses on the effectiveness of fintech in mitigating the problem of stock mispricing. Based on the theoretical explanation of the relationship between fintech and mispricing, the data of Chinese A-share listed companies is used to empirically test its theoretical logic. The study found that fintech can help correct mispricing problems. This conclusion is still valid after a series of robustness tests such as variable substitution, exclusion of special samples, addition of other control variables, fixed effects substitution, placebo test, and instrumental variable test. Mechanism analysis shows that fintech breaks information islands through “digital empowerment”, which is beneficial internally to reduce internal agency problems and financial difficulties of enterprises, and externally can increase institutional investors’ holdings and reduce analysts’ forecast differences. The above-mentioned mechanisms are important pathways for improving mispricing. Further research reveals that, for different property rights, industry categories, and market environments, the “error correction” capabilities of fintech are heterogeneous. Especially in non-state-owned enterprises, traditional industries and in the bear market stage, the effectiveness of fintech in correcting mispricing is more significant. In addition, fintech mainly solves the problem of mispricing of companies whose stock prices are undervalued, but has limited effect on the problem of mispricing of companies whose stock prices are overvalued. This may be due to the “capital chasing” characteristics of fintech and the short-selling restrictions in China’s capital market. Important association. The conclusions of this paper provide important policy connotations for promoting the improvement of the capital market resource allocation function and the financial digitalization reform.