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Personal information protection, digital technology innovation, and corporate financial dynamics

Author

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  • Yang, Jun
  • Zhao, Zheyi
  • Xiao, Mingyue
  • Ma, Yuting

Abstract

This paper examines the impact of personal information protection on firms' digital technology innovation, using the implementation of China's Personal Information Protection Law (PIPL) as a quasi-natural experiment. Using data from A-share listed companies and a Double Machine Learning (DML) approach, we find that personal information protection significantly promotes firms' digital technology innovation. This effect is particularly pronounced for firms in high-tech industries, digital economy sectors, regions with high cultural sensitivity, and areas with strong intellectual property protection. Mechanism analysis identifies three channels: enhancing data supply, stimulating digital consumption, and strengthening supply-demand matching. Dynamic analysis shows that although personal information protection reduces short-term profits due to higher compliance costs, it generates long-term competitive spillovers that enhance revenue and profitability. These findings contribute to the literature on privacy protection in emerging economies and offer valuable insights into how to balance data governance with innovation incentives.

Suggested Citation

  • Yang, Jun & Zhao, Zheyi & Xiao, Mingyue & Ma, Yuting, 2026. "Personal information protection, digital technology innovation, and corporate financial dynamics," Pacific-Basin Finance Journal, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:pacfin:v:98:y:2026:i:c:s0927538x26000879
    DOI: 10.1016/j.pacfin.2026.103141
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