Abstract: This paper takes China's A-share listed companies in Shanghai and Shenzhen in 2013-2019 as a sample to study the impact of digital transformation on business operating risk and its mechanism of action.The research has found that digital transformation has a significantly negative correlation with business operating risk,that is,digital transformation can effectively reduce the related risk.After carrying out a series of sensitivity tests,the above conclusions still hold good.Further analysis of mechanism of action has shown that the internal control quality,information transparency and enterprise innovation are important intermediary channels for digital transformation to affect business operating risk.The study has also found that,compared with non-state-owned enterprises,the negative impact of digital transformation on business operating risk is stronger in state-owned enterprises,and that the better the local market environment is,the smaller negative impact of digital transformation has on business operating risk.

Key words: digital transformation, operating risk, information transparency, enterprise innovation