Enterprise digital transformation and debt financing cost in China?s A-share listed companies

Authors

DOI:

https://doi.org/10.24136/oc.2022.023

Keywords:

digital transformation, digital economy, debt financing cost, information asymmetry, agency problem

Abstract

Research background: The rapid development of digital economy has set off a new wave of enterprise reform. Developing the digital economy is not only an urgent requirement of the current situation, but also an important way to meet the people's better life.

Purpose of the article: This paper attempts to reveal the important role of the development of digital technology on the debt financing cost of micro enterprises, and provide micro evidence for the integration of digital economy and real economy. At the same time, this paper wants to provide relevant guidance for formulating digital related policies and reducing the financing cost of the real economy.

Methods: Taking China?s A-share listed companies from 2007 to 2020 as a sample, this paper empirically tests the impact of enterprise digital transformation on debt financing cost and its mechanism. In the robustness test, this paper uses the measures of changing independent variables and dependent variables, instrumental variable method and quantile regression method. In the mechanism test, this paper uses the intermediary effect model. In the further study, this paper uses the method of group regression.

Findings & value added: The study finds that the digital transformation of enterprises significantly reduces the cost of debt financing. Mechanism tests show that the role of enterprise digital transformation in reducing debt financing costs is mainly realized by reducing information asymmetry and alleviating agency problems. Further tests show that the relationship between enterprise digital transformation and debt financing cost is affected by the degree of market competition, whether it is a high-tech enterprise and audit quality. When the degree of market competition is high, the enterprise is a high-tech one, or it is audited by the four major international accounting firms, the effect of enterprise digital transformation on the reduction of debt financing cost is more significant. The method used in this paper is also applicable to the study of other economic management problems. This paper proves a positive significance of digital transformation, which is conducive to promoting the digital transformation of enterprises. Especially for those enterprises in non-high-tech industries, they should speed up the pace. At the same time, this paper has a certain guiding role for the introduction and implementation of policies to encourage digital transformation.

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2022-09-25

How to Cite

Sun, C., Zhang, Z., Vochozka, M. ., & Vozňáková, I. (2022). Enterprise digital transformation and debt financing cost in China?s A-share listed companies. Oeconomia Copernicana, 13(3), 783–829. https://doi.org/10.24136/oc.2022.023

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