How does the data element-driven industry affect corporate cash holdings? Evidence from Chinese listed companies.

ABSTRACT

The data element-driven industry (DEDI) generates large amounts of data, thereby mitigating information asymmetry. Does this affect corporate cash holdings? On the basis of theoretical analysis, this study empirically analyzes the impact of DEDI on enterprises' cash holdings and its transmission path using data of Chinese cities and A-share listed enterprises from 2008 to 2020. First, the results indicate that the DEDI reduces corporate cash holdings. As the development level of the DEDI improves, the corporate cash holdings gradually decrease. Second, the DEDI indirectly affects corporate cash holdings by influencing debt-financing and external credit supply capacities. Specifically, the DEDI increases the upstream corporate debt-financing and downstream corporate external credit supply capacities. Improvements in debt-financing and the external credit supply capacities can reduce corporate cash holdings. Third, the DEDI has a heterogeneous impact. For enterprise with CEO duality, small and medium-sized, and information technology enterprises, the impact of DEDI in reducing cash holdings is greater.