Digital transformation tone signal and the cost of equity: Evidence from Chinese listed companies

We use text analysis to extract the tone of digital transformation disclosure and investigate the relationship between digital transformation tone and equity cost using Chinese companies listed on Shenzhen and Shanghai A-share markets between 2009 and 2020. The results show that a rise in the positivity of digital transformation tone can reduce the cost of equity, which remains unaffected by a battery of robustness tests. Further analysis reveals that information asymmetry and investor attention partially mediate this field's effects. This paper's findings are essential for comprehending the value of information disclosure in enterprise digital transformation.