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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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    Cited by:

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    2. Kong, Dongmin & Liu, Boyang & Zhu, Ling, 2023. "Stem CEOs and firm digitalization," Finance Research Letters, Elsevier, vol. 58(PC).
    3. Wang, Guiying & Lamadrid, Richel L. & Huang, Yu, 2024. "Digital transformation and enterprise outward foreign direct investment," Finance Research Letters, Elsevier, vol. 65(C).
    4. Cao, Ce & Zeng, Duxuan & Wan, Qiong & Li, Yifei, 2024. "Employee satisfaction and digital transformation: Evidence from China’s Top 100 Best Employers list," Journal of Asian Economics, Elsevier, vol. 94(C).
    5. Chen, Zhe & Cao, Yushan & Liao, Kaicheng, 2024. "How state-owned equity participation promotes the digital transformation of nonstate-owned enterprises: Evidence from China," Finance Research Letters, Elsevier, vol. 59(C).
    6. Yue, Sishi & Yang, Mo & Dong, Dayong, 2024. "Do enterprises adopting digital finance exhibit higher values? Based on textual analysis," The North American Journal of Economics and Finance, Elsevier, vol. 73(C).

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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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