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Digital transformation and corporate capital structure: Evidence from China

Author

Listed:
  • Xue, Yi
  • Zhang, Xinzhi

Abstract

The impact of digital transformation, a profound organizational change within firms, on corporate capital structure is not well understood. Using a sample of publicly listed companies from 2010 to 2021 in China, we document that digital transformation significantly boosts corporate debt financing, tilting firm's capital structure towards debt. Further analysis shows that digital transformation improves firm operating performance and reduces bankruptcy risk, which is consistent with trade-off theory. The positive effect of digital transformation on debt financing is more pronounced when firms are with more developed markets, better legal environments, and are non-state-owned.

Suggested Citation

  • Xue, Yi & Zhang, Xinzhi, 2024. "Digital transformation and corporate capital structure: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:pacfin:v:84:y:2024:i:c:s0927538x24000507
    DOI: 10.1016/j.pacfin.2024.102299
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    More about this item

    Keywords

    Digital transformation; Capital structure; Debt financing; The trade-off theory;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • 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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