Digital Disruption in Asset Pricing: Reexamining CAPM Assumptions in Platform Economies and Algorithmic Trading Era

Abstract

We examine the theoretical impact of digital technologies on the CAPM and trace the pathways through which these technologies reshape asset pricing mechanisms. Findings reveal that the rapid development of platform economies and algorithmic trading is challenging the three core assumptions of CAPM: market efficiency, investor rationality, and mean-variance preferences. Digital technologies have reconfigured asset pricing mechanisms by altering market microstructure, reshaping risk-return relationships, and introducing novel pricing logic channels. Empirical results indicate that digital transformation exerts a significant positive impact on firm value but a negative effect on short-term asset returns, revealing the limitations of traditional CAPM in explaining asset pricing in the digital era. This study offers a new theoretical perspective for understanding asset pricing patterns in the digital finance era, providing important implications for investment practice and financial regulation.