EconPapers    
Economics at your fingertips  
 

Navigating digital frontiers: The impact of China's cybersecurity law on corporate digital innovation

Hongze Chen, Conggang Li, Jiatao Liu and Rong Xu

International Review of Financial Analysis, 2025, vol. 103, issue C

Abstract: In this paper, we find that after the enactment of China's Cybersecurity Law, firms in core digital industries produce more digital innovation than those in industries with lower digital adoption. Leveraging this regulatory shift as a quasi-natural experiment, we examine its impact on corporate digital innovation using a text-based analysis of annual reports. The promotional effect of privacy regulations on digital innovation resembles the Porter hypothesis, which addresses the positive effect of environmental regulations on innovation. Our study delves into the nuanced dynamics, revealing that firms facing high market competition, customer concentration, and fewer financial constraints prioritize digital innovation. This research contributes by highlighting how strengthened data privacy regulation promotes firms' digital innovation, fostering sustained growth and productivity in the digital era.

Keywords: Privacy regulation; Digital privacy; Digital innovation; Cybersecurity (search for similar items in EconPapers)
JEL-codes: L51 L86 O31 O38 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521925002698
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:finana:v:103:y:2025:i:c:s1057521925002698

DOI: 10.1016/j.irfa.2025.104182

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-05-20
Handle: RePEc:eee:finana:v:103:y:2025:i:c:s1057521925002698