The impact of digital transformation on firm performance: a perspective from enterprise risk management

From the perspective of enterprise risk management(ERM), this paper adopts excess return of shareholders as a proxy variable for firm performance and divides ERM into strategic decision-making effectiveness and internal control based on the theory of resilient risk management. Using panel data of A-share listed companies in Shanghai and Shenzhen from 2015 to 2020, A multiple linear regression model was established to empirically investigate the impact of digital transformation on firm performance and its underlying mechanism. The findings reveal that enterprise digital transformation can improve performance and can increase performance by improving both strategic effectiveness and internal control level. The results also show that the sample enterprises prioritize internal control during the implementation enterprise risk management. Finally, the study finds that board IT governance negatively moderates the influence of digital transformation on enterprise risk management. Further analysis demonstrates that non-state-owned firms exhibit stronger motivation than state-owned firms in promoting digital transformation for achieving higher performance outcomes. However, it is important for enterprises not to blindly increase investment in digital technology as it may lead to potential pitfalls associated with digitization paradox.