Digital transformation and corporate financialization: evidence against the tech bubble hypothesis

Abstract The inquiry into whether the current surge in digital technology constitutes another emerging technological bubble holds important significance for both the progression of digital technology and the soundness of the financial sector. This study uses Chinese listed companies in the Shanghai and Shenzhen stock markets as samples to investigate the effect of digital transformation on the corporate financialization of entity enterprises and to explore its impact mechanism to elucidate whether ongoing digital technology advancement may be indicative of a potential technology bubble. The study revealed that digital transformation has a negative effect on corporate financialization. Specifically, digital transformation restricts corporate financialization by enhancing primary business operations, improving corporate R&D, and reducing corporate agency costs. Moreover, the study identifies property rights heterogeneity, policy support heterogeneity, regional heterogeneity and period heterogeneity in the impact of digital transformation on corporate financialization. The findings demonstrate that the current surge in digital technology significantly facilitates enterprise development, which is not a technology bubble.