Effects of Digital Transformation on Dynamic Capital Structure Adjustment: Evidence from China
Over the past two decades, there has been a surge in digital innovation. China is the world’s second-largest digital economy entity and the national strategy to build a digital China is in full swing. Chinese enterprises have received great support while pursuing digital transformation. This study a...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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MDPI AG
2023-06-01
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| Series: | Systems |
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| Online Access: | https://www.mdpi.com/2079-8954/11/7/330 |
| _version_ | 1797587390333714432 |
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| author | Ye Chen Lei Shen Yuchen Bian Xi Zhang |
| author_facet | Ye Chen Lei Shen Yuchen Bian Xi Zhang |
| author_sort | Ye Chen |
| collection | DOAJ |
| description | Over the past two decades, there has been a surge in digital innovation. China is the world’s second-largest digital economy entity and the national strategy to build a digital China is in full swing. Chinese enterprises have received great support while pursuing digital transformation. This study aims to explore the impact of digital transformation on firm dynamic capital structure adjustment by taking evidence from Chinese listed firms. Based on the data of 3855 Chinese A-share listed firm-year observations during 2011–2021, this study employed a panel data fixed effects model to ascertain the association between the proposed variables. The results indicate that digital transformation has a significant positive effect on accelerating capital structure adjustment speed. Furthermore, we show that digital transformation promotes dynamic capital structure adjustment through financial flexibility. The impact of digital transformation on dynamic capital structure adjustment is characterized by heterogeneity in the ownership type, asset size, and credit cycle. In addition, reduced financing constraints and growing economic policy uncertainty will moderate the relationship between digital transformation and dynamic capital structure adjustment. Our findings provide insights into how digital transformation is driving companies to accelerate their capital structure adjustment speed to the optimal, and supplements the existing literature on the determinants of dynamic capital structure adjustment. |
| first_indexed | 2024-03-11T00:36:22Z |
| format | Article |
| id | doaj.art-9da93a86cd6a40fca38852da53f25129 |
| institution | Directory Open Access Journal |
| issn | 2079-8954 |
| language | English |
| last_indexed | 2024-03-11T00:36:22Z |
| publishDate | 2023-06-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Systems |
| spelling | doaj.art-9da93a86cd6a40fca38852da53f251292023-11-18T21:35:42ZengMDPI AGSystems2079-89542023-06-0111733010.3390/systems11070330Effects of Digital Transformation on Dynamic Capital Structure Adjustment: Evidence from ChinaYe Chen0Lei Shen1Yuchen Bian2Xi Zhang3Glorious Sun School of Business and Management, Donghua University, Shanghai 200051, ChinaGlorious Sun School of Business and Management, Donghua University, Shanghai 200051, ChinaGlorious Sun School of Business and Management, Donghua University, Shanghai 200051, ChinaSchool of Management, Fudan University, Shanghai 200433, ChinaOver the past two decades, there has been a surge in digital innovation. China is the world’s second-largest digital economy entity and the national strategy to build a digital China is in full swing. Chinese enterprises have received great support while pursuing digital transformation. This study aims to explore the impact of digital transformation on firm dynamic capital structure adjustment by taking evidence from Chinese listed firms. Based on the data of 3855 Chinese A-share listed firm-year observations during 2011–2021, this study employed a panel data fixed effects model to ascertain the association between the proposed variables. The results indicate that digital transformation has a significant positive effect on accelerating capital structure adjustment speed. Furthermore, we show that digital transformation promotes dynamic capital structure adjustment through financial flexibility. The impact of digital transformation on dynamic capital structure adjustment is characterized by heterogeneity in the ownership type, asset size, and credit cycle. In addition, reduced financing constraints and growing economic policy uncertainty will moderate the relationship between digital transformation and dynamic capital structure adjustment. Our findings provide insights into how digital transformation is driving companies to accelerate their capital structure adjustment speed to the optimal, and supplements the existing literature on the determinants of dynamic capital structure adjustment.https://www.mdpi.com/2079-8954/11/7/330digital transformationdynamic capital structure adjustmentfinancial flexibilityfinancing constraintseconomic policy uncertainty |
| spellingShingle | Ye Chen Lei Shen Yuchen Bian Xi Zhang Effects of Digital Transformation on Dynamic Capital Structure Adjustment: Evidence from China Systems digital transformation dynamic capital structure adjustment financial flexibility financing constraints economic policy uncertainty |
| title | Effects of Digital Transformation on Dynamic Capital Structure Adjustment: Evidence from China |
| title_full | Effects of Digital Transformation on Dynamic Capital Structure Adjustment: Evidence from China |
| title_fullStr | Effects of Digital Transformation on Dynamic Capital Structure Adjustment: Evidence from China |
| title_full_unstemmed | Effects of Digital Transformation on Dynamic Capital Structure Adjustment: Evidence from China |
| title_short | Effects of Digital Transformation on Dynamic Capital Structure Adjustment: Evidence from China |
| title_sort | effects of digital transformation on dynamic capital structure adjustment evidence from china |
| topic | digital transformation dynamic capital structure adjustment financial flexibility financing constraints economic policy uncertainty |
| url | https://www.mdpi.com/2079-8954/11/7/330 |
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