Abstract
We investigate the impact of enterprise digital transformation on the breadth of ownership and stock price volatility. Our findings demonstrate that enterprise digital transformation has enhanced the breadth of ownership. Furthermore, through cross-sectional analysis, we find that this effect is more prominent in firms with lower investor attention, greater stock underpricing, and in regions with higher levels of digitalization. Additionally, we have discovered that the increase of media coverage and investor attention serve as the underlying economic mechanism between digital transformation and ownership dispersion. Our analysis also shows that digital transformation has the potential to worsen stock price volatility. Finally, our examination of open-end mutual funds reveals a digital preference among mutual fund investors; this preference has improved fund flows while exacerbating fund volatility. Our study has practical implications for regulators and corporate managers, as they highlight the impact of digital transformation on investor decision-making.
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