Digital Economy, Innovation, and Firm Value: Evidence from China

53 Pages Posted: 12 Jan 2024

See all articles by Yihuan Mao

Yihuan Mao

Southwestern University of Finance and Economics (SWUFE)

Ning Hu

Southwestern University of Finance and Economics (SWUFE)

Tiecheng Leng

Harbin Institute of Technology

Ying Liu

Shanghai Lixin University of Accounting and Finance

Abstract

In this study, we investigate the impact of the development of the digital economy on corporate innovation and value using data of listed firms in China spanning the years 2011 to 2018. Our findings reveal a positive correlation between the development of the digital economy and corporate innovative activities, with a more pronounced effect observed in growth-stage firms, labor-intensive enterprises, and companies situated in underdeveloped regions. To establish a causal relationship, we employ a quasi-experimental approach utilizing the "Broadband China" pilot program. Using a difference-in-difference framework, we establish a causal link between the advancement of the digital economy and the increased innovative activities. Furthermore, our research underscores that digital economy development enhances firm value by promoting innovative activities. These results support the view that the digital economy plays a pivotal role in increasing firm value and fostering sustainable development in the overall economy.

Keywords: digital economy, corporate innovation, Firm Value, Broadband China

Suggested Citation

Mao, Yihuan and Hu, Ning and Leng, Tiecheng and Liu, Ying, Digital Economy, Innovation, and Firm Value: Evidence from China. Available at SSRN: https://ssrn.com/abstract=4693319 or http://dx.doi.org/10.2139/ssrn.4693319

Yihuan Mao

Southwestern University of Finance and Economics (SWUFE) ( email )

Chengdu
China

Ning Hu

Southwestern University of Finance and Economics (SWUFE) ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

Tiecheng Leng

Harbin Institute of Technology ( email )

92 West Dazhi Street
Nan Gang District
Harbin, 150001
China

Ying Liu (Contact Author)

Shanghai Lixin University of Accounting and Finance ( email )

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