How does Financial Misallocation Affect Enterprise Transformation and Upgrading based on the Perspective of Digital Transformation

Ningjia Lu

doi:10.54097/hbem.v9i.9097

Authors

Ningjia Lu

DOI:

https://doi.org/10.54097/hbem.v9i.9097

Keywords:

Financial Misallocation; Enterprise Digitalization; Innovation Input; Innovation Output; Innovation Efficiency.

Abstract

Financial misallocation deviates capital factors from prices which should be determined by market supply and demand. Not only does it exacerbate economic instability at the macro level, but also reduces the operating efficiency of enterprises at the micro level. Using China A-share listed enterprises from 2008 to 2020 as the original research sample, this paper empirically investigates the impact of financial misallocation on the digital transformation of enterprises and its mechanism of action, and conducts heterogeneity analysis based on enterprise characteristics. Findings demonstrate that: (1) Financial misallocation significantly inhibits the digital transformation of enterprises; (2) Financial misallocation decelerates the transformation process by obstructing the innovation capability of enterprises; (3) The inhibitory effect of financial misallocation on digitalizations of non-SOEs and SMEs is far more evident. This study provides a meaningful empirical basis and policy enlightenment for financial resources to effectively empower the real economy and promote the high-quality development of China’s economy.

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