Abstract
This study uses text analysis and machine learning methods to construct an index of firms' digital innovation, and employs the triple difference method (DDD) to empirically examine the impact of the COVID-19 on digital innovation of Chinese listed companies. We find that firms' digital innovation, particularly in terms of digital product innovation, has increased after the COVID-19 outbreak, and the promotion of COVID-19 on digital innovation is more pronounced among low-leverage, non-declining periods, and tertiary industry firms. Our results imply that despite the adverse effects brought about by the COVID-19, such as cash flows constrains and revenues reductions, the opportunities it presents for firms' digital innovation cannot be ignored.
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