Big data tax enforcement, earnings management, and cost of debt

Using a sample of Chinese A-share nonfinancial listed companies from 2015 to 2023, this study investigates the impact of big data tax collection and administration on firms’ cost of debt financing, with particular attention to the mediating role of earnings management. The empirical results show that an increase in the intensity of big data tax administration significantly reduces firms’ debt financing costs. Earnings management plays a partial mediating role between big data tax administration and financing costs—that is, strengthened tax enforcement lowers financing costs by curbing earnings management. The effect of big data tax administration on debt financing costs is more pronounced among private firms, in regions with high-enforcement intensity, and among smaller enterprises. Further endogeneity and robustness tests confirm the reliability of the findings. This study provides empirical evidence on the microeconomic consequences of tax supervision policies in the digital economy era. It offers valuable insights for optimizing both corporate financing decisions and government regulatory models.