Can digitalization empowerment improve the efficiency of corporate capital allocation? —Evidence from China

Cong Li, Jiaxuan Liu, Yuwei Liu and Xiaoyu Wang

Economic Analysis and Policy, 2023, vol. 80, issue C, 1794-1810

Abstract: In the digital economy era, digital empowerment is a crucial measure to enhance capital allocation efficiency (CAE). To examine the effect of digital empowerment on CAE, we conducted a study using Chinese listed firms as a research sample. Our findings indicate that (1) Digital empowerment significantly enhances the CAE. (2) Digital empowerment improves the CAE in enterprises by reducing agency costs and enhancing operational capabilities. (3) This effect is even more pronounced in non-state-owned enterprises, enterprises with low leverage, and those with weak levels of external oversight. (4) Further research suggests that digital empowerment leads to a reduction in under investments and reduces operating investments. The research in the article provides a theoretical framework for enterprises to enhance CAE and governance level. It also offers policy insights for promoting effective digital transformation of businesses and presents valuable references for advancing digital economy in China.

Keywords: Digital empowerment; Capital allocation efficiency; Agency cost; Operational capability (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592623002941
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:80:y:2023:i:c:p:1794-1810

DOI: 10.1016/j.eap.2023.11.014

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().