Risk disclosure or governance signal? Digital technology risks and institutional ownership

Applied Economics. 2026. P. 1–20.

Nan D., Wang J.

Using data from Chinese A-share listed companies from 2007 to 2024, this study examines the market response to corporate digital technology risk disclosure, with a focus on institutional investor holdings. The results show that digital technology risk disclosure increases institutional investor holdings, lending support to the convergence hypothesis of risk disclosure. And this is primarily driven by salient negative risk disclosure, rather than mitigation-oriented words. Mechanism analyses reveal two channels: reducing information asymmetry and promoting digital transformation. Moreover, effects are stronger for firms with higher disclosure quality, CEOs with IT backgrounds, and greater tax incentives. Further analysis shows cyber risk disclosure boosts institutional ownership, whereas data risk disclosure does not. Disclosure also promotes institutional investor site visits, indicating it shapes ownership decisions and motivates them to verify reported information. These findings provide empirical insights into institutional preferences and have implications for firms, investors, and regulators.

Keywords: information asymmetry, цифровая трансформация, digital transformation, Информационная асимметрия, Digital technology risk disclosure, institutional investor holdings, Цифровое раскрытие рисков технологий, Доля институциональных инвесторов

Publication based on the results of: Institutions, human capital and regional Development: historical analysis and contemporary challenges (2025)