Corporate digital transformation and financing constraints: The moderating effect of institutional investors.

In the age of digitization, digital transformation has emerged as a crucial pathway for companies to achieve sustainable development. In a sample of 24,103 firm-year observations from 3,508 listed companies in China's A-share market between 2007 and 2020, we investigate the relationship between corporate digital transformation and financing constraints based on dynamic capability theory. The proportion of intangible assets dedicated to digital technology is employed as a measure of the degree of digital transformation, and the SA index is utilized to assess the level of financing constraints. The findings demonstrate that digital transformation plays a significant role in alleviating financing constraints. In addition, greater institutional ownership leads to a pronounced negative correlation between digital transformation and financing constraints. From the perspective of dynamic capability theory, this study provides empirical evidence supporting research on economic consequences associated with digital transformation. Our results may contribute towards government formulation and implementation of policies promoting digital transformation to create a supportive external environment for businesses. Companies must seize opportunities associated with digital transformation to mitigate financing constraints.