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Capital market liberalization and corporate digital transformation: Evidence from China’s Stock Connect programs

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  • Deng, Fuhua
  • Tan, Yongtong
  • Ni, Mingjie

Abstract

This study investigates the effect of capital market liberalization on corporate digital transformation by leveraging the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs. Using Chinese listed firms from 2011 to 2022, we find that capital market liberalization significantly promotes corporate digital transformation. Mechanism analyses suggest that this effect operates through two main channels: reducing agency costs and easing financial constraints. Heterogeneity analyses further reveal that the positive effect is more pronounced for platform firms, firms in the service sector, and those located in regions with high levels of trade openness.

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  • Deng, Fuhua & Tan, Yongtong & Ni, Mingjie, 2025. "Capital market liberalization and corporate digital transformation: Evidence from China’s Stock Connect programs," Finance Research Letters, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:finlet:v:84:y:2025:i:c:s1544612325010669
    DOI: 10.1016/j.frl.2025.107808
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