Does firm size strengthen the relationship between digital transformation and capital structure? A case in ASEAN nations

Digital transformation can reduce information asymmetry and influence firms’ financing strategies, yet its impact depends on national economic conditions and digital infrastructure. This study aims to examine the effect of digital transformation on the capital structure of manufacturing firms in Indonesia, Malaysia, and Singapore, with firm size analyzed both as an independent and moderating variable. The research employs a quantitative approach using panel regression analysis on an unbalanced dataset of 2,490 listed manufacturing firms observed during 2014–2023, applying fixed effects for Indonesia and random effects for Malaysia and Singapore. The results indicate that digital transformation does not significantly affect capital structure in Indonesia and Singapore, while in Malaysia it has a significant negative effect, reflecting the high costs of digital investment that reduce reliance on debt. Firm size shows a consistently positive influence on capital structure across all three countries and significantly strengthens the effect of digital transformation in Malaysia. These findings highlight that the financial outcomes of digital transformation are shaped by firm scale and national context. The study extends agency theory and the resource-based view, while offering practical implications for managers and policymakers to design financing strategies aligned with the economic and social conditions of each country.