Digital transformation and corporate labor investment efficiency

Sai Wang, Wen Wen, Yuhao Niu and Xin Li

Emerging Markets Review, 2024, vol. 59, issue C

Abstract: This study investigates whether and how digital transformation affects corporate labor investment efficiency. Based on a sample of Chinese listed firms from 2008 to 2020, this paper finds that digital transformation increases corporate labor investment efficiency. Our results still hold after using a series of robustness checks. Mechanism tests show that reducing agency problems and mitigating financing restrictions are potential channels through which digital transformation improves corporate labor investment efficiency. Further analyses reveal that digital transformation reduces both overinvestment and underinvestment in labor. Distinguishing different digital technologies, we find that artificial intelligence, big data, cloud computing technology, as well as digital technology applications improve corporate labor investment efficiency, while the impact of blockchain technology is insignificant. In addition, digital transformation's positive effect on corporate labor investment efficiency is more pronounced for firms in non-labor-intensive industries, private firms, and those with more highly skilled labor. Overall, this study deepens our understanding of digital transformation's governance role in improving corporate labor investment efficiency.

Keywords: Digital transformation; Labor investment efficiency; Agency problem; Financial constraints; Corporate governance (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:59:y:2024:i:c:s1566014124000049

DOI: 10.1016/j.ememar.2024.101109

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