Mechanism analysis.

Purpose
The purpose of this paper is to study the impact of enterprises’ digital transformation on the risk of stock price crashes, but also to study the mediating role of enterprises’ financialization and accounting conservatism in the enterprises’ digital transformation on stock price crash risk.
Design/methodology/approach
Based on the data of 2,599 listed companies in China from 2010 to 2019, this paper constructs indicators of enterprise digital transformation through word frequency analysis method, and uses fixed-effects model and mediated-effects model to explore the impact and mechanism of enterprise digital transformation on the stock price crash risk.
Findings
This study shows that firms’ digital transformation reduces the risk of stock price crashes and that financialization of firms and accounting conservatism play a significant mediating effect between enterprises’ digital transformation and the risk of stock price crashes.
Originality/value
This study enriches the study of stock price crash risk by including digital transformation in the field of stock price crash research, and it examines the mediating roles of financialization of enterprises and accounting conservatism, which provides a new explanatory mechanism to the study of the correlation between digital transformation of enterprises and the risk of stock price crash.