Digital Transformation and Enterprise Financialization: The Role of Operating Capacity

Digital Transformation (DT) is a new business model developed by adopting digital technologies. DT creates opportunities for enterprises to gain and collect information on operations for visible analysis. Due to the benefits of DT as well as the harms of Enterprise Financialization (EF), the impact of DT on EF and its mechanism are worthy of further investigation. In this paper, Chinese public enterprise observations of the panel data from 2011 to 2020 are adopted to investigate the impact and the mechanism of DT on EF. The results show that DT can restrain EF through enhancing Operating Capacity (OC). More specifically, this effect is much more pronounced in state-owned enterprises (SOEs), start-up enterprises, and board minor-size enterprises. The findings provide contributions for digital transformation policy enactment as well as suggestions for enterprises to improve OC and reduce EF tendencies.