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Does digital transformation matter for corporate risk-taking?

Author

Listed:
  • Tian, Guangning
  • Li, Bo
  • Cheng, Yue

Abstract

This paper investigates how the digital transformation of firms affects their risk-taking in China. By using a panel of Chinese listed companies from 2007 to 2020, we find that digital transformation has a significant positive effect on corporate risk-taking. Furthermore, we show that digital transformation promotes corporate risk-taking by improving firms’ operating flexibility and financing availability. Besides, the effect is more pronounced for non-state-owned firms and the firms operating in developed regions. Our findings provide insights on how digital transformation shapes corporate policies and supplement the existing literature in the determinants of corporate risk-taking.

Suggested Citation

  • Tian, Guangning & Li, Bo & Cheng, Yue, 2022. "Does digital transformation matter for corporate risk-taking?," Finance Research Letters, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:finlet:v:49:y:2022:i:c:s1544612322003312
    DOI: 10.1016/j.frl.2022.103107
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    References listed on IDEAS

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    More about this item

    Keywords

    Digital transformation; Corporate risk-taking; Operating flexibility; Financing availability;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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