Going Digital: Implications for Firm Value and Performance

dc.contributor.author Srinivasan, Suraj
dc.contributor.author Chen, Wilbur
dc.date.accessioned 2020-12-01T00:49:14Z
dc.date.available 2020-12-01T00:49:14Z
dc.date.issued 2020-08-13
dc.description.abstract We examine firm value and performance implications of the growing trend of non-technology companies adopting digital technologies, using a measure based on the disclosure of digital words in the business description section of 10-Ks. Digital adoption is associated with a market-to-book ratio 8-26% higher than industry peers. Part of the differences in market-to-book is explained by accounting capitalization restrictions, which we estimate to explain roughly 15% of the differences. Portfolios formed on digital disclosure earn a DGTW-adjusted return of 36% over a 3-year horizon and a monthly alpha of 57-basis-points. We also find significant increases in asset turnover conditional on digital activities, while also finding significant declines in margins and sales growth.
dc.identifier.uri http://hdl.handle.net/10125/70488
dc.subject Digital Adoption
dc.subject Valuation
dc.subject Return Predictability
dc.title Going Digital: Implications for Firm Value and Performance
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