Local government debt and corporate digital transformation: Evidence from China

Yang Yang, Wanying Chen and Zhuangxiong Yu

Finance Research Letters, 2023, vol. 57, issue C

Abstract: This paper explores the effects and influence mechanism of local government debt on corporate digital transformation in Chinese listed companies, an area that has not been explored in the existing literature. We find that the expansion of local government debt has a significantly negative impact on corporate digital transformation. Such negative impact is greater in non-state-owned enterprises and companies with low concentration of ownership, as well as those in provinces with low fiscal self-sufficiency rates and low bank competition. Mechanism analysis shows that local government debt inhibits corporate digital transformation by intensifying corporate financing constraints and distorting corporate investment preferences.

Keywords: Local government debt; Corporate digital transformation; Crowding out effect; Financing constraints; Investment preferences (search for similar items in EconPapers)
JEL-codes: G32 H63 M15 O33 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323006542

DOI: 10.1016/j.frl.2023.104282

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