Based on the data of listed companies in China from 2011 to 2020, this paper adopts the deviation from the optimal residual method to identify the phenomenon of exaggerated disclosure in firm digitization, and accordingly analyzes the impact of two modes on corporate performance and its possible governance measures. The study finds that: (1) Some firms strategically cater to the development of the digital economy by disclosing a large number of digital keywords in their annual reports to exaggerate the level of digitization. (2) Digital exaggerated disclosure only brings government subsidy support and media attention to firms in the short term, and it increases the probability of corporate information disclosure violations being punished, which has a long-term negative impact on corporate performance. Exaggerated disclosure reflects the characteristics of some firms that only focus on immediate benefits but ignore long-term development. (3) The profitability of firms that adopt the “walking the talk” disclosure mode significantly improves, and their operating costs significantly decrease. Meanwhile, they continue to receive support from government subsidies, effectively enjoying the dividends of the development of the digital economy. (4) Strengthening external audit supervision and introducing institutional shareholdings can help reduce the phenomenon of exaggerated disclosure. Based on the above conclusions, this paper believes that: First, in the future, we should further improve the regulatory system for non-financial information disclosure of listed companies, enhance the information transparency in digitization, and squeeze the space for firms to engage in false propaganda. Second, we should establish credible digital evaluation indicators, and standardize the digital disclosure forms of listed companies. At the same time, we should optimize the target selection process for digital economy support policies, and dynamically evaluate the effectiveness of digitization. Third, we should strengthen support for firm digitization, solve the difficulties in digitization, and encourage firms to “walking the talk” in digital disclosure.