Do enterprises adopting digital finance exhibit higher values? Based on textual analysis

Sishi Yue, Mo Yang and Dayong Dong

The North American Journal of Economics and Finance, 2024, vol. 73, issue C

Abstract: In this paper, we investigate whether enterprises adopting digital finance exhibit higher values. Based on the Management Discussion and Analysis (MD&A) sections of annual reports, we employ textual analysis and machine learning techniques to construct an indicator of the degree to which enterprises apply digital finance. We utilize panel data regression and mediation models based on data of Chinese A-share listed companies from 2016 to 2022 and explore the impact of this degree of digital finance application on enterprise value. We find that the degree to which enterprises apply digital finance elevates their values. The in-depth integration of digital technology and finance directly enhances enterprise value by reducing financing costs. Additionally, the effects are more evident among small-scale firms and enterprises in regions with lower marketization. However, in the face of the impact of the COVID-19 pandemic, the positive effects on enterprises are relatively low.

Keywords: Digital finance; Financing cost; Enterprise value; Textual analysis; Machine learning (search for similar items in EconPapers)
JEL-codes: G10 G30 G34 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:73:y:2024:i:c:s1062940824001062

DOI: 10.1016/j.najef.2024.102181

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