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Local government debt and corporate digital transformation: Evidence from China

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  • Yang, Yang
  • Chen, Wanying
  • Yu, Zhuangxiong

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.

Suggested Citation

  • Yang, Yang & Chen, Wanying & Yu, Zhuangxiong, 2023. "Local government debt and corporate digital transformation: Evidence from China," Finance Research Letters, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323006542
    DOI: 10.1016/j.frl.2023.104282
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    More about this item

    Keywords

    Local government debt; Corporate digital transformation; Crowding out effect; Financing constraints; Investment preferences;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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