Does Digital Transformation Reflect the Adjustment of Capital Structure?

Mohamad Anas Ktit () and Bashar Abu Khalaf
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Mohamad Anas Ktit: Accounting & Finance Department, University of Doha for Science and Technology, Doha P.O. Box 24449, Qatar
Bashar Abu Khalaf: Accounting & Finance Department, University of Doha for Science and Technology, Doha P.O. Box 24449, Qatar

JRFM, 2025, vol. 18, issue 4, 1-18

Abstract: This study investigates the effect of digital transformation on non-financial firms’ adjustment of the capital structure in European countries while controlling for firm characteristics (firm size, tangibility, profitability, and non-debt tax shields), board characteristics (board size, board gender diversity, and board meetings), and macroeconomic variables (GDP and inflation). Data were collated from the platform Refinitiv Eikon (LSEG). The final sample size was 514 companies during the 2010–2023 period. Panel GMM regression was used to thoroughly investigate the impact of digital transformation on the adjustment of capital structure. The results show that digital transformation improves capital structure adjustments. Based on the results of panel GMM regression, our results hold and confirm that there is a positive significant impact of digital transformation on the adjustment of capital structure. The main recommendation for businesses and policy makers is to successfully enter the digital age.

Keywords: digital transformation; capital structure adjustment; non-financial firms; European countries; panel GMM regression (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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