Disclosure of information on digital transformation and market capitalization of Russian companies: The effect of revenue and cost aspects

Vollständiger Abstract

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Aim. To assess the impact of the volume of disclosure of information on digital transformation, divided into revenue (revenue generation), cost (operational efficiency improvement), and infrastructure aspects, on the market capitalization of Russian companies from the Moscow Exchange Index. Methods. Based on 216 annual reports of 31 non-financial companies from the Moscow Exchange Index for 2014–2024, using LDA and BERTopic methods, the author’s dictionary of digital transformation terms is constructed. Three classes are identified: revenue generation, operational efficiency improvement and cost management, and development of strategic digital infrastructure. Based on the dictionary, indices of disclosure of information on digital transformation are calculated, i.e., the number of mentions of key terms in annual reports. The impact on market capitalization is estimated using panel regression with fixed effects and robust standard errors. Results. The findings can be used by company management in formulating non-financial information disclosure policy, by investment analysts and portfolio managers in evaluating digital transformation signals in annual reports, and by regulators in developing disclosure standards for digital initiatives. Conclusions. Disclosure of information on digital transformation in the annual reports of Russian companies is perceived by stock market participants as a positive signal; contrary to expectations, the greatest contribution is made by the description of digital transformation aspects related to operational efficiency improvement and cost reduction. The obtained result is consistent with signaling theory and the semi-strong form of the efficient market hypothesis, but shows that investors still do not distinguish between the expected effects of the revenue and cost aspects of digital transformation when making financial decisions.