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Corporate digital transformation and cost of equity capital

Year: 2024

Type: article

Abstract: This paper examines the impact of corporate digital transformation on the cost of equity capital. The results indicate that corporate digital transformation significantly reduces the cost of equity capital. Mechanism tests find that digital transformation can reduce the cost of equity capital by improving the quality of disclosure, reducing operational risk, and enhancing economic performance. Cross-sectional analysis finds that the relationship between digital transformation and the cost of equity capital is stronger for non-state-owned firms, non-high-tech firms, and firms with a better environment for building external digital infrastructure. Our findings reveal the impact of the digital technology revolution on market investors, providing important empirical evidence that digital transformation can help improve the efficiency of capital market resource allocation.

Source: China Journal of Accounting Studies

DOI: 10.1080/21697213.2025.2469707

Authors: Li Ji, Wei Jiang, Bofu Deng

Institution: Southwestern University of Finance and Economics

Language: English

Topic: Digital Economy and Transformation

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $1,459