The Impact of Digital Transformation on the Debt Financing Costs of Firms

Abstract

The digital economy, with digital technology as its core driving force, is subverting the traditional economic and social operating model. In the context of the deep integration of the digital economy and the real economy, digital transformation is the consensus of almost all firms. As the first driving force of the firm’s operations, financing activities will inevitably be affected by the digital transformation of firms. Based on the perspective of financing, this study empirically tests the impact of digital transformation of firms on the cost of debt financing. When measuring variables, this study uses the technology of data mining and text analysis to measure the extent of digital transformation of firms. The research results show that the digital transformation of firms is significantly negatively related to the cost of debt financing. In addition, for firms with different equity nature, there are significant differences in the impact of digital transformation on the cost of debt financing.