Digital Technology,Industry Shock And Corporate Decision-making

With the advent of the digital technology era,a new generation of digital technologies(such as big data,the Internet of Things,AI,and blockchain)have developed vigorously,bringing big changes to all aspects of the economy and society.The 19th Congress of the Communist Party of China further recognized data as the seventh production factor after labor,capital,land,knowledge,technology,and management,reflecting the importanc e of digital technology and the construction of Digital China.As a production factor,how to use the potential use-value or economic value is particularly important.Moreover,digital technology has promoted the speed of data collection and the decrease of collection cost,and the level of departmental coordination and decision-making has gradually improved.Therefore,how these emerging technologies affect corporate decisions has also attracted the attention of the public and scholars.I obtain the patent text content of A-share listed companies from the State Intellectual Property Office.And I adopt machine learning methods to distinguish the patents into digital and non-digital technology,to further analyze the value relevance of digital technology and its influence on decision-making behaviors.Specifically,I have the following three main findings.First,I focus on the patent value of digital technology and its impact on industry value.The results show that when a company releases a patent application,digital technology has a higher patent value than non-digital technology.At the same time,the negative impact of digital technology on the market value of the same industry is greater.In the additional tests,the above results are more pronounced when the industry competition or the protection of intellectual property rights is high.Moreover,I find that the promotion of digital technology to firm value mainly comes from AI and IoT technology,while different types of digital technology are all significantly negative with industry value.The conclusions provide further empirical evidence for the value of digital technology and the impact of the industry,as well as some substantive evidence for responding to doubts about the low quality of inventions in China.Second,I examine the impact of digital technology on corporate investment decisions.The results show that compared with non-digital technology,digital technology can effectively reduce inefficient investment,especially over-investment,but do not affect under-investment.Further tests show that digital technology mainly reduces over-investment caused by manager overconfidence and information asymmetry.In the cross-sectional tests,the above results are more pronounced in the firms with growth stage,higher product market competition,and more complex businesses.What’s more,I find that the inhibitory effect of digital technology on overinvestment mainly comes from blockchain and IoT technology.Finally,the results show that digital technology improves firm value by reducing inefficient investment(especially over-investment).The conclusions provide further empirical evidence for the influence of emerging technologies(especially digital technologies)on corporate decisions.Third,this study analyzes the peer effect of digital technology.The results show that compared with non-digital technology,digital technology from peer firms can effectively increase the R&D investment of own-firm.Digital technology from peer firms weakens the competitive advantages of own-firm and pushes the firm to invest more R&D.Although the increase in R&D investment is not conducive to the accounting performance in the short term,it is conducive to improving the firm value in the long run.And firms with more R&D can also obtain more government subsidies and bank loans.Further,I also find that the strategic response of own-firm to the digital technology of peer firms is mainly reflected in AI and IoT technology.In the crosssectional tests,the above results are more pronounced in the firms with higher CEO compensation,younger CEO,lower financial constraints,fiercer product market competition,and in traditional industries.The conclusions provide further empirical evidence for the influence of emerging technologies on corporate decisions and broaden the research on peer effects.The contributions are as follows.First,this study expands the value relevance research at the patent level.Specifically,I expand the patent-level related research to digital and non-digital technology with machine learning methods.And I compare and analyze the difference of economic value and industry value between digital and nondigital technology.Secondly,this paper provides empirical evidence on how emerging technologies affect corporate decisions,mainly from the perspective of investment efficiency and R&D investment.At the same time,based on the development of new digital technology,this paper also expands the extension of the traditional finance and accounting research.Forth,unlike the general classifications of patents,I reclassify the types of patents and further divide digital technology into big data,IoT,cloud computing,AI,and blockchain.Moreover,I compare the differences among different technologies.Finally,this study has certain practical significance and may help accelerate the integration of digital economy and real economy to achieve high-quality economic development.