How digital technology improves the high-quality development of enterprises and capital markets: A liquidity perspective

This paper finds that the digitalization has a positive impact on stock liquidity, especially those lack analyst follow-up or low online media attention. We use “Made in China 2025” as an exogenous shock to conduct difference-in-differences estimation to improve causality. We discuss a possible mechanism based on classical information asymmetry theory. Our results are robust to a battery of tests based on different specifications and alternative measures. Overall, this research evaluates the significance of digital transformation for enterprises and has implications for enhancing capital market liquidity.