Core Business Assets Integration, Digital Transformation and Stock Liquidity: Evidence from China Listed Companies

This study examines the effect of core business asset integration on stock liquidity. Core business assets integration involves acquiring assets aligned with core operations while divesting non-core assets. We hypothesize that these integrations help to strengthen the main business and improve companies’ intrinsic value, thereby increasing stock liquidity. We test this using a panel data from A-share companies in China. Consistent with our hypothesis, we find that core business asset integration significantly improves stock liquidity. New evidence indicates that digital transformation is mechanism for the impact of core business asset integration on stock liquidity. Further analysis reveals that the effect of core business asset integration on stock liquidity is more pronounced in private companies compared with state-owned companies. This study deepens the understanding of core business asset integration as a new phenomenon in practice and complements the issue of the relationship between core business asset integration and stock liquidity.