The Effect of Financial Digital Transformation on Financial Performance: The Intermediary Effect of Information Symmetry and Operating Costs

Abstract

The ability of A-share listed companies to adhere to the digital economy and achieve long-term corporate benefits amidst an uncertain external environment through financial digital transformation remains a crucial concern for entrepreneurs and scholars. The objective of this study was to scrutinize the effect of financial digital transformation on financial performance among 2566 of China’s A-share listed companies in the hopes of providing informative recommendations for businesses that are currently undertaking or planning to undertake financial digital transformation. To investigate the mechanism by which financial performance among A-share listed companies was influenced by digital transformation, a panel data regression model was utilized. The findings suggest that, first and foremost, financial digital transformation significantly boosts corporate financial performance for A-share listed companies, and this enhancement is sustainable over time. For every 1% growth in financial digital transformation, corporate financial performance improves by 1.1%. Corporate financial performance is projected to improve by 29.8% during the next three financial years. Secondly, information symmetry and operational expenses function as intermediaries in the financial digital transformation process that affects firm financial performance. For every 1% increase in financial digital transformation, the information symmetry level of firms grows by 15.1%, while the operational cost rate declines by 0.8%. Thirdly, information disclosure and operating costs play a chained intermediary role. Every 1% increase in the level of information symmetry reduces the operating cost rate by 2.3%. Fourthly, in comparison to enterprises in eastern provinces, businesses located in central and western provinces are better positioned to improve their financial performance by undertaking a financial digital transformation.