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Can corporate digitalization deter leverage manipulation? Evidence from China

Author

Listed:
  • Zhao, Ningru
  • Liu, Lanlan
  • Chen, Youyang
  • Yu, Xiaoyu

Abstract

Corporate leverage manipulation behavior can obscure the true operational performance of companies, ultimately harm investors’ interests and negatively impacting financial stability. With corporate digitalization trending globally and driving economic growth, this paper investigates whether it can help reduce companies leverage manipulation. We find that corporate digitalization can reduce the magnitude of leverage manipulation by relieving financial constraints and enhancing information transparency. Various robustness checks including the alternative model, the instrument variable and the propensity score matching validate our findings. This study deepens the understanding of the economic consequences of corporate digitalization.

Suggested Citation

  • Zhao, Ningru & Liu, Lanlan & Chen, Youyang & Yu, Xiaoyu, 2025. "Can corporate digitalization deter leverage manipulation? Evidence from China," Finance Research Letters, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:finlet:v:84:y:2025:i:c:s1544612325010542
    DOI: 10.1016/j.frl.2025.107796
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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