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Digital government and corporate leverage: Evidence from China.

Digital government and corporate leverage: Evidence from China.

Authors :
Ding, Zifang
Qu, Shen
Zhou, Shangyao
Lu, Siran
Source :
Economic Analysis & Policy; Sep2024, Vol. 83, p457-479, 23p
Publication Year :
2024

Abstract

Corporate leverage is an indicator of economic health, and this topic has attracted a great deal of attention since the international financial crisis of 2008. This paper constructs a model of enterprise decision-making under a digital government and theoretically analyzes how the government digital reform impacts corporate leverage and the mechanism of this impact. Theoretical analysis has previously shown that digital reforms by governments help to ease the information asymmetry between banks and enterprises, which in turn affects the actual economic activities of enterprises. Based on these findings, the "one-stop government service" natural experiment used in this paper and the empirical analysis using a multiphase difference-in-differences (DID) method show that digital government can inhibit the short-term debt financing of enterprises while improving their long-term debt financing. This study further finds that the digital government can improve the level of long-term debt for long-term use, thereby reducing corporate leverage. By enriching the theoretical and empirical research on government digital reform, this paper contributes significant theoretical and practical insights to the literature on corporate leverage in the context of government factors. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
03135926
Volume :
83
Database :
Supplemental Index
Journal :
Economic Analysis & Policy
Publication Type :
Academic Journal
Accession number :
179369407
Full Text :
https://doi.org/10.1016/j.eap.2024.06.026