Digital transformation and corporate capital structure: Evidence from China

Yi Xue and Xinzhi Zhang

Pacific-Basin Finance Journal, 2024, vol. 84, issue C

Abstract: The impact of digital transformation, a profound organizational change within firms, on corporate capital structure is not well understood. Using a sample of publicly listed companies from 2010 to 2021 in China, we document that digital transformation significantly boosts corporate debt financing, tilting firm's capital structure towards debt. Further analysis shows that digital transformation improves firm operating performance and reduces bankruptcy risk, which is consistent with trade-off theory. The positive effect of digital transformation on debt financing is more pronounced when firms are with more developed markets, better legal environments, and are non-state-owned.

Keywords: Digital transformation; Capital structure; Debt financing; The trade-off theory (search for similar items in EconPapers)
JEL-codes: D21 G30 G32 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:84:y:2024:i:c:s0927538x24000507

DOI: 10.1016/j.pacfin.2024.102299

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