The effect of digital technology adoption on managerial myopia: An empirical discovery based on machine Learning

Jie Gao, Xingye Jin, Tao Li and Thithuha Nguyen

International Review of Economics & Finance, 2025, vol. 98, issue C

Abstract: To explore the impact of digital adoption on managerial myopia, we use Shanghai and Shenzhen A-share data from 2008 to 2020 and employ manual reading and supervised machine-learning methods to construct a new indicator and accurately evaluate digital adoption in listed companies. By measuring the degree of managerial myopia, this paper analyzes the impact of corporate digital adoption on managerial myopia. The empirical resultsshow that corporate digital adoption significantly alleviates managerial myopia. These findings still hold after running endogeneity and robustness tests. Mechanism analysis reveals that the adoption of digital technology directly or indirectly alleviates managerial myopia by improving the incentive level for managers, strengthening the quality of internal control, increasing the proportion of institutional investors, and enhancing external supervision. Further analysis shows that different kinds of digital technologies can limit managerial myopia to varying degrees. Our heterogeneity analyses show that this effect is more pronounced for large enterprises, private enterprises, enterprises with long-term debt, enterprises in central regions, enterprises with high industry competition, manufacturing enterprises, enterprises with weak government connection and strong internal control and external supervision.

Keywords: Digital echnology; Machine learning; Managerial myopia (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:98:y:2025:i:c:s1059056025000127

DOI: 10.1016/j.iref.2025.103849

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