How Do Enterprise Digital Transformation Impact on Cash Dividend Policies:"Information Path"or"Capital Path"
In recent years,digital transformation has become the only way for high-quality development of enterprises.Whether and how does it affect financial decisions also has become a new and important research topic.We study the issue with taking A-share listed companies from 2010 to 2020 as samples,and find that,the digital transformation of enterprises significantly reduces the lev-el of cash dividend payment,which indicates the impact path is"Capital Path"(Change the funding plan),rather than"Information Path"(Change the expectation of performance and information asymmetry).Specifically,there are two effects supporting the"Capital Path".One is the"Crowding Out"effect,which shows that the digital transformation of enterprises not only needs to invest large funds,but also"Crowding out"cash dividends by increasing investment expenditures of M&A and R&D.Under the"Crowding out"effect,the negative effect of digital transformation on cash dividends is only significant in companies which are short of funds,such as growth companies and non-state-owned companies.The other is the"Substitution"effect,which shows that the digital trans-formation substitutes the governance function of cash dividends by improving the agency efficiency,so that companies reduce cash div-idends for the purpose of saving funds.Under the"Substitution"ef-fect,the negative effect of digital transformation on cash dividends is only significant in enterprises with strong internal and external supervision.Furthermore,the digital transformation prompt enter-prises to use more retained earnings for non-dividend expenditure,which proves the"Capital Path"again.All in all,this paper explores the impact of enterprise digital transformation on cash dividend policy and its theoretical explanation,which providing a new per-spective for the research on enterprise digital transformation and dividend policy in theory.In practice,it is helpful for the overall ar-rangement between enterprise digital transformation and financial decision-making,and promoting the development of digital econo-my.
Enterprise Digital TransformationFinancial DecisionDividendLife CycleCorporate Governance
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