Digital transformation and corporate cash holdings in China’s A-share listed companies

Kód výsledku v IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F04130081%3A_____%2F22%3AN0000009" target="_blank" >RIV/04130081:_____/22:N0000009 - isvavai.cz</a>

Výsledek na webu

<a href="http://economic-research.pl/Journals/index.php/oc/article/view/2104" target="_blank" >http://economic-research.pl/Journals/index.php/oc/article/view/2104</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.24136/oc.2022.031" target="_blank" >10.24136/oc.2022.031</a>

Jazyk výsledku

angličtina

Název v původním jazyce

Digital transformation and corporate cash holdings in China’s A-share listed companies

Popis výsledku v původním jazyce

Research background: In the digital era, digital transformation has become a strategic imperative for leadership agenda. Many firms have accelerated their pace in digital transformation to improve their performance and competitiveness. Despite increasing attention in the literature on the role of digital transformation in firms’ operations, understanding the effect of digital transformation on corporate finance remains limited. This study focuses on cash holdings, which are essential for firms to survive and thrive. Purpose of the article: The aim of this paper is to examine the critical role of digital transformation on the cash holdings of listed firms in China and provide micro evidence regarding the economic consequences of the digital economy from firm level. This study also aims to deepen our understanding of the influence of digital transformation on firms’ operation and financial policy. Additionally, this paper attempts to provide relevant guidance for implementing policies to promote digital transformation and devise corresponding cash holding strategies. Methods: The text analysis method is used to measure the degree of digital transformation of China’s A-share listed companies. The sample covers 19,337 observations from 2007–2020. A multiple regression model with firm and year fixed effect is developed to investigate the relationship between digital transformation and corporate cash holdings. In the robustness test, this paper substitutes the independent and dependent variables, and adopts instrumental variable estimation method. In the mechanism test, this paper uses the sub-sample regression method in the mechanism test. Findings & value added: This study reveals that digital transformation can significantly reduce corporate cash holdings by alleviating the precautionary motive, agency motive and transaction motive of cash holdings. Further analysis shows that the negative effect of digital transformation on cash holdings is more profound in high-tech firms and non-state-owned enterprises. The methodology applied in this paper can be used in other economic research of firms. This study provides insights into the effects of digital transformation on corporate financial policy. This provides a solution for reducing firms’ cash holdings. This study also deepens the understanding of digital transformation from a corporate perspective.

Název v anglickém jazyce

Digital transformation and corporate cash holdings in China’s A-share listed companies

Popis výsledku anglicky

Research background: In the digital era, digital transformation has become a strategic imperative for leadership agenda. Many firms have accelerated their pace in digital transformation to improve their performance and competitiveness. Despite increasing attention in the literature on the role of digital transformation in firms’ operations, understanding the effect of digital transformation on corporate finance remains limited. This study focuses on cash holdings, which are essential for firms to survive and thrive. Purpose of the article: The aim of this paper is to examine the critical role of digital transformation on the cash holdings of listed firms in China and provide micro evidence regarding the economic consequences of the digital economy from firm level. This study also aims to deepen our understanding of the influence of digital transformation on firms’ operation and financial policy. Additionally, this paper attempts to provide relevant guidance for implementing policies to promote digital transformation and devise corresponding cash holding strategies. Methods: The text analysis method is used to measure the degree of digital transformation of China’s A-share listed companies. The sample covers 19,337 observations from 2007–2020. A multiple regression model with firm and year fixed effect is developed to investigate the relationship between digital transformation and corporate cash holdings. In the robustness test, this paper substitutes the independent and dependent variables, and adopts instrumental variable estimation method. In the mechanism test, this paper uses the sub-sample regression method in the mechanism test. Findings & value added: This study reveals that digital transformation can significantly reduce corporate cash holdings by alleviating the precautionary motive, agency motive and transaction motive of cash holdings. Further analysis shows that the negative effect of digital transformation on cash holdings is more profound in high-tech firms and non-state-owned enterprises. The methodology applied in this paper can be used in other economic research of firms. This study provides insights into the effects of digital transformation on corporate financial policy. This provides a solution for reducing firms’ cash holdings. This study also deepens the understanding of digital transformation from a corporate perspective.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

50204 - Business and management

Projekt

—

Návaznosti

N - Vyzkumna aktivita podporovana z neverejnych zdroju

Rok uplatnění

2022

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

Oeconomia Copernicana

ISSN

2083-1277

e-ISSN

—

Svazek periodika

13

Číslo periodika v rámci svazku

4

Stát vydavatele periodika

PL - Polská republika

Počet stran výsledku

36

Strana od-do

1081-1116

Kód UT WoS článku

000907675800010

EID výsledku v databázi Scopus

2-s2.0-85147207696