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Digital innovation and the cost-of-equity capital: Evidence from the supply chain

Author

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  • Yan, Jiayi
  • Tang, Zishen
  • Yang, Kai
  • Li, Donghui
  • Fan, Xinyue

Abstract

We investigate how digital-innovation spillovers along the supply chain affect equity capital costs using a sample of Chinese listed A-share companies from 2009 to 2021. Empirical results indicate that focal firms’ digital innovation reduces their supply chain partners’ equity costs. This effect is more pronounced when focal firms are nonstate-owned and have less bargaining power in the supply chain. The key mechanisms include increased digital-innovation output and enhanced firm value for supply chain partners. Additionally, focal firms’ strategic information disclosure and technical expertise in management strengthen the cost-reducing effect, while default risk weakens it. This spillover effect is further amplified when supply chain partners have higher levels of research and development human capital. Our results remain robust after accounting for various robustness checks.

Suggested Citation

  • Yan, Jiayi & Tang, Zishen & Yang, Kai & Li, Donghui & Fan, Xinyue, 2026. "Digital innovation and the cost-of-equity capital: Evidence from the supply chain," Research in International Business and Finance, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:riibaf:v:84:y:2026:i:c:s0275531926000346
    DOI: 10.1016/j.ribaf.2026.103307
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