IDEAS home Printed from https://ideas.repec.org/a/eee/ecofin/v73y2024ics1062940824001062.html
   My bibliography  Save this article

Do enterprises adopting digital finance exhibit higher values? Based on textual analysis

Author

Listed:
  • Yue, Sishi
  • Yang, Mo
  • Dong, Dayong

Abstract

In this paper, we investigate whether enterprises adopting digital finance exhibit higher values. Based on the Management Discussion and Analysis (MD&A) sections of annual reports, we employ textual analysis and machine learning techniques to construct an indicator of the degree to which enterprises apply digital finance. We utilize panel data regression and mediation models based on data of Chinese A-share listed companies from 2016 to 2022 and explore the impact of this degree of digital finance application on enterprise value. We find that the degree to which enterprises apply digital finance elevates their values. The in-depth integration of digital technology and finance directly enhances enterprise value by reducing financing costs. Additionally, the effects are more evident among small-scale firms and enterprises in regions with lower marketization. However, in the face of the impact of the COVID-19 pandemic, the positive effects on enterprises are relatively low.

Suggested Citation

  • Yue, Sishi & Yang, Mo & Dong, Dayong, 2024. "Do enterprises adopting digital finance exhibit higher values? Based on textual analysis," The North American Journal of Economics and Finance, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:ecofin:v:73:y:2024:i:c:s1062940824001062
    DOI: 10.1016/j.najef.2024.102181
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1062940824001062
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.najef.2024.102181?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mingtao Yu & Aiguo Yan, 2022. "Can Digital Finance Accelerate the Digital Transformation of Companies? From the Perspective of M&A," Sustainability, MDPI, vol. 14(21), pages 1-16, November.
    2. Maria Demertzis & Silvia Merler & Guntram B Wolff, 2018. "Capital Markets Union and the Fintech Opportunity," Journal of Financial Regulation, Oxford University Press, vol. 4(1), pages 157-165.
    3. Pengpeng Yue & Aslihan Gizem Korkmaz & Zhichao Yin & Haigang Zhou, 2022. "The rise of digital finance: Financial inclusion or debt trap," Papers 2201.09221, arXiv.org.
    4. Xia, Yanchun & Qiao, Zhilin & Xie, Guanghua, 2022. "Corporate resilience to the COVID-19 pandemic: The role of digital finance," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    5. Xue, Fujing & Li, Xiaoyu & Zhang, Ting & Hu, Nan, 2021. "Stock market reactions to the COVID-19 pandemic: The moderating role of corporate big data strategies based on Word2Vec," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    6. Su, Yingliang & Wu, Jiahua, 2024. "Digital transformation and enterprise sustainable development," Finance Research Letters, Elsevier, vol. 60(C).
    7. Fan, Joseph P.H. & Wong, T.J. & Zhang, Tianyu, 2007. "Politically connected CEOs, corporate governance, and Post-IPO performance of China's newly partially privatized firms," Journal of Financial Economics, Elsevier, vol. 84(2), pages 330-357, May.
    8. Peterson K. Ozili, 2018. "Impact of digital finance on financial inclusion and stability," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 18(4), pages 329-340, December.
    9. Mark P. Bauman, 2014. "Forecasting operating profitability with DuPont analysis," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 13(2), pages 191-205, May.
    10. Philippe Aghion & Thibault Fally & Stefano Scarpetta, 2007. "Credit constraints as a barrier to the entry and post-entry growth of firms [‘Dualism and macroeconomic volatility’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 22(52), pages 732-779.
    11. Al-Awadhi, Abdullah M. & Alsaifi, Khaled & Al-Awadhi, Ahmad & Alhammadi, Salah, 2020. "Death and contagious infectious diseases: Impact of the COVID-19 virus on stock market returns," Journal of Behavioral and Experimental Finance, Elsevier, vol. 27(C).
    12. Tiago Cavalcanti & Bruno Martins & Cezar Santos & Joseph Kaboski, 2018. "Dispersion in Financing Costs and Development," 2018 Meeting Papers 426, Society for Economic Dynamics.
    13. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-586, June.
    14. Shiguang Li & Zheng Yang & Yixiang Tian, 2023. "Digital transformation and corporate performance: evidence from China," China Economic Journal, Taylor & Francis Journals, vol. 16(3), pages 312-334, September.
    15. Li, Jiu-Jin & Xu, Chang & Fung, Hung-Gay & Chan, Kam C., 2021. "Do venture capital firms promote corporate social responsibility?," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 718-732.
    16. Davies, J.R. & Hillier, David & McColgan, Patrick, 2005. "Ownership structure, managerial behavior and corporate value," Journal of Corporate Finance, Elsevier, vol. 11(4), pages 645-660, September.
    17. Laeven, Luc & Levine, Ross & Michalopoulos, Stelios, 2015. "Financial innovation and endogenous growth," Journal of Financial Intermediation, Elsevier, vol. 24(1), pages 1-24.
    18. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
    19. Sebastian C. Moenninghoff & Axel Wieandt, 2013. "The Future of Peer-to-Peer Finance," Schmalenbach Journal of Business Research, Springer, vol. 65(5), pages 466-487, September.
    20. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    21. Peter Gomber & Jascha-Alexander Koch & Michael Siering, 2017. "Digital Finance and FinTech: current research and future research directions," Journal of Business Economics, Springer, vol. 87(5), pages 537-580, July.
    22. Xiuxiu Jiang & Xia Wang & Jia Ren & Zhimin Xie, 2021. "The Nexus between Digital Finance and Economic Development: Evidence from China," Sustainability, MDPI, vol. 13(13), pages 1-17, June.
    23. Tao Kong & RenJi Sun & Guanglin Sun & Youtao Song, 2022. "Effects of Digital Finance on Green Innovation considering Information Asymmetry: An Empirical Study Based on Chinese Listed Firms," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(15), pages 4399-4411, December.
    24. repec:oup:ecpoli:v:22:y:2007:i::p:731-779 is not listed on IDEAS
    25. Jiang, Fuwei & Lee, Joshua & Martin, Xiumin & Zhou, Guofu, 2019. "Manager sentiment and stock returns," Journal of Financial Economics, Elsevier, vol. 132(1), pages 126-149.
    26. Ozili, Peterson Kitakogelu, 2018. "Impact of Digital Finance on Financial Inclusion and Stability," MPRA Paper 84771, University Library of Munich, Germany.
    27. Li, Chengming & Wang, Yilin & Zhou, Zhihan & Wang, Zeyu & Mardani, Abbas, 2023. "Digital finance and enterprise financing constraints: Structural characteristics and mechanism identification," Journal of Business Research, Elsevier, vol. 165(C).
    28. Chen, Shengqi & Zhang, Hong, 2021. "Does digital finance promote manufacturing servitization: Micro evidence from China," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 856-869.
    29. Liu Yang & Youtang Zhang, 2020. "Digital Financial Inclusion and Sustainable Growth of Small and Micro Enterprises—Evidence Based on China’s New Third Board Market Listed Companies," Sustainability, MDPI, vol. 12(9), pages 1-21, May.
    30. Li, Jie & Wu, Yu & Xiao, Jing Jian, 2020. "The impact of digital finance on household consumption: Evidence from China," Economic Modelling, Elsevier, vol. 86(C), pages 317-326.
    31. Yang, Yang & Chen, Wanying & Yu, Zhuangxiong, 2023. "Local government debt and corporate digital transformation: Evidence from China," Finance Research Letters, Elsevier, vol. 57(C).
    32. Smaoui, Houcem & Mimouni, Karim & Miniaoui, Héla & Temimi, Akram, 2020. "Funding liquidity risk and banks' risk-taking: Evidence from Islamic and conventional banks," Pacific-Basin Finance Journal, Elsevier, vol. 64(C).
    33. Xuanming Ji & Kun Wang & He Xu & Muchen Li, 2021. "Has Digital Financial Inclusion Narrowed the Urban-Rural Income Gap: The Role of Entrepreneurship in China," Sustainability, MDPI, vol. 13(15), pages 1-18, July.
    34. Lin, Aijie & Peng, Yulei & Wu, Xi, 2022. "Digital finance and investment of micro and small enterprises: Evidence from China," China Economic Review, Elsevier, vol. 75(C).
    35. Pang, Si Lu & Liu, Hui & Hua, Gui Hong, 2024. "How does digital finance drive the green economic growth? New discoveries of spatial threshold effect and attenuation possibility boundary," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 561-581.
    36. Zhang, Jiaqing & Chen, Xiaohui & Zhao, Xindong, 2023. "A perspective of government investment and enterprise innovation: Marketization of business environment," Journal of Business Research, Elsevier, vol. 164(C).
    37. Yue, Pengpeng & Korkmaz, Aslihan Gizem & Yin, Zhichao & Zhou, Haigang, 2022. "The rise of digital finance: Financial inclusion or debt trap?," Finance Research Letters, Elsevier, vol. 47(PA).
    38. Lee, In & Shin, Yong Jae, 2018. "Fintech: Ecosystem, business models, investment decisions, and challenges," Business Horizons, Elsevier, vol. 61(1), pages 35-46.
    39. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 81-112.
    40. Yue, Sishi & Wu, Keke & Dong, Dayong, 2023. "Managements' corporate growth beliefs and M&As – Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 68(C).
    41. Dou, Bin & Guo, SongLin & Chang, XiaoChen & Wang, Yong, 2023. "Corporate digital transformation and labor structure upgrading," International Review of Financial Analysis, Elsevier, vol. 90(C).
    42. Zhang, Yue & Ge, Mengshuai & Yang, Jiaju & Liu, Cuiying & Chen, Xi, 2023. "Controlling shareholders' equity pledge, digital finance, and corporate digital transformation," International Review of Financial Analysis, Elsevier, vol. 90(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhou, Chao & Liao, Jinglin, 2024. "Home country digital finance development and post-entry internationalization speed of emerging market SMEs: Empirical evidence from China," International Review of Financial Analysis, Elsevier, vol. 91(C).
    2. Liuhua Fang & Bin Zhao & Wenyu Li & Lixia Tao & Luyao He & Jianyu Zhang & Chuanhao Wen, 2023. "Impact of Digital Finance on Industrial Green Transformation: Evidence from the Yangtze River Economic Belt," Sustainability, MDPI, vol. 15(17), pages 1-23, August.
    3. Xia, Yanchun & Qiao, Zhilin & Xie, Guanghua, 2022. "Corporate resilience to the COVID-19 pandemic: The role of digital finance," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    4. Liu, Yutong & Zheng, Mingbo & Shum, Wai Yan, 2024. "On the linkages between digital finance and real economy in China: A cointegration analysis," Innovation and Green Development, Elsevier, vol. 3(1).
    5. Khalid, Fahad & Irfan, Muhammad & Srivastava, Mohit, 2024. "The impact of digital inclusive finance on ESG disputes: Evidence from Chinese non-financial listed companies," Technological Forecasting and Social Change, Elsevier, vol. 204(C).
    6. Song, Yunxing & Gong, Yuanyuan & Song, Yan & Chen, Xiaohui, 2024. "Exploring the impact of digital inclusive finance on consumption volatility: Insights from household entrepreneurship and income volatility," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    7. Hu, Debao & Zhai, Chenzhe & Zhao, Sibo, 2023. "Does digital finance promote household consumption upgrading? An analysis based on data from the China family panel studies," Economic Modelling, Elsevier, vol. 125(C).
    8. Yang, Yang & Lin, Zibo & Xu, Zhaoyi & Liu, Shuwen, 2024. "The impact of digital finance on regional economic resilience," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    9. Siqi Huang & Nik Hadiyan Nik Azman, 2023. "Enhancing Food Security through Digital Inclusive Finance: Evidence from Agricultural Enterprises in China," IJERPH, MDPI, vol. 20(4), pages 1-20, February.
    10. Feng, Suling & Zhang, Rong & Li, Guoxiang, 2022. "Environmental decentralization, digital finance and green technology innovation," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 70-83.
    11. Yan, Bin & Wang, Feng & Chen, Tian & Liu, Siyu & Bai, Xiaoxuan, 2023. "Digital finance, environmental regulation and emission reduction in manufacturing industry: New evidence incorporating dynamic spatial-temporal correlation and competition," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 750-763.
    12. Yi Yang & Shuhe Shi & Jingjing Wu, 2022. "Digital Financial Inclusion to Corporation Value: The Mediating Effect of Ambidextrous Innovation," Sustainability, MDPI, vol. 14(24), pages 1-23, December.
    13. Rui Ding & Siwei Shen & Yuqi Zhu & Linyu Du & Shihui Chen & Juan Liang & Kexing Wang & Wenqian Xiao & Yuxuan Hong, 2023. "Evolution, Forecasting, and Driving Mechanisms of the Digital Financial Network: Evidence from China," Sustainability, MDPI, vol. 15(22), pages 1-18, November.
    14. Ren, Xiaohang & Zeng, Gudian & Zhao, Yang, 2023. "Digital finance and corporate ESG performance: Empirical evidence from listed companies in China," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    15. Lanhua Zhang & Manxiu Ning & Chaoying Yang, 2023. "Evaluation of the Mechanism and Effectiveness of Digital Inclusive Finance to Drive Rural Industry Prosperity," Sustainability, MDPI, vol. 15(6), pages 1-17, March.
    16. Heping Ge & Lianzhen Tang & Xiaojun Zhou & Decai Tang & Valentina Boamah, 2022. "Research on the Effect of Rural Inclusive Financial Ecological Environment on Rural Household Income in China," IJERPH, MDPI, vol. 19(4), pages 1-16, February.
    17. Alwahidin N & Arlita Jufra & Beti Mulu & Kiki Novita Sari, 2023. "A New Economic Perspective: Understanding The Impact Of Digital Financial Inclusion On Indonesian Households Consumption," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 26(2), pages 333-360, May.
    18. Razzaq, Asif & Yang, Xiaodong, 2023. "Digital finance and green growth in China: Appraising inclusive digital finance using web crawler technology and big data," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    19. Yaqoob, Tanzeela & Maqsood, Arfa, 2024. "The potency of time series outliers in volatile models: An empirical analysis of fintech, and mineral resources," Resources Policy, Elsevier, vol. 89(C).
    20. Avani Raval & Rajesh Desai, 2024. "Reviews and directions of FinTech research: bibliometric–content analysis approach," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(3), pages 1115-1134, September.

    More about this item

    Keywords

    Digital finance; Financing cost; Enterprise value; Textual analysis; Machine learning;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecofin:v:73:y:2024:i:c:s1062940824001062. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620163 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.