Research On The Impact Of Digital Transformation On The Speed Of Capital Structure Adjustment

As one of the important financial decisions of enterprises,the decision of capital structure has a great impact on the value and stability of enterprises.Research in the field of capital structure continues to expand and is more in line with the reality of enterprise development.Recent studies have directed attention towards the dynamic modification of an enterprise’s capital structure.According to the theory of dynamic capital structure,the enterprise’s value is optimized when its capital structure attains the target capital structure.In fact,due to the impact of environmental changes,there is a deviation between the actual capital structure of the enterprise and its target capital structure.Therefore,companies need to constantly adjust their capital structure to maximize value.However,given the indeterminate nature of the target capital structure,achieving maximal value requires the enterprise to continuously fine-tune its actual capital structure towards the optimal level.The rapid adjustment of the capital structure of enterprises to the optimal level can avoid the erosion of enterprise value by abnormal capital structure.Therefore,how to speed up the adjustment of capital structure in an increasingly competitive industry is an important issue that every enterprise needs to solve.As the digital transformation of enterprises continues to deepen,it will have a profound impact on the external environment,internal organization,operation and financial status of enterprises.The capital structure of the enterprise can be influenced by both internal and external factors that lead to changes in the business environment.Based on this,this thesis conducts research on the impact of digital transformation on the speed of capital structure adjustment.Based on relevant theoretical frameworks,this study examines the impact of digital transformation on the pace of capital structure adjustment and its underlying mechanisms,using panel data from Chinese A-share listed companies between 2008 and 2020.Empirical findings indicate that digital transformation can expedite the speed of capital structure adjustment,which remains robust after controlling for potential econometric biases.Mechanism testing suggests that digital transformation enhances the quality of internal controls and reduces strategic differences,thus promoting faster capital structure adjustment.This thesis offers novel insights and empirical evidence into the relationship between digital transformation and the pace of capital structure adjustment.Furthermore,scenario-based adjustment testing indicates that the effects of digital transformation on the speed of capital structure adjustment become more pronounced in highly competitive product markets,uncertain environments,and stronger intellectual property protection regimes.This research provides a fresh perspective on the factors influencing the speed of capital structure adjustment.Based on the empirical findings,this study puts forth the following recommendations: Firstly,enterprises should prioritize investments in digitalization,leverage digital technologies to enhance the quality of internal controls,and emulate mainstream strategies.Moreover,during the transformation process,enterprises should opt for suitable transformation routes based on their specific circumstances.Secondly,the government should capitalize on the opportunities presented by digital economic development,extend policy preferences to support enterprise digital transformation,foster a favorable development environment,enhance the training of digital talents,and create conditions for enterprise digital transformation,thus laying a robust foundation for China’s economy’s high-quality development.