The Impact of Digital Transformation and Corporate Cost Efficiency: Evidence from China’s A-Share Listed Firms

Abstract

This study aims to investigate the impact of digital transformation on corporate cost efficiency and its underlying mechanisms. In relate to panel data from Chinese A-share listed companies for the period 2007-2022, we construct a Digital Transformation (DT) indicator using a keyword-based method and measure cost efficiency using metrics such as the input-output efficiency of main business costs. Furthermore, this study introduces variables including financing constraints, industry technological intensity, and property rights nature to examine the pathways through which digital transformation affects cost efficiency. A review of the literature reveals that existing research predominantly focuses on the impact of digital transformation on investment efficiency, innovation performance, or cost stickiness (e.g., Wu et al., 2021; Liu et al., 2025; Chen & Xu, 2023), with less attention paid to the perspective of cost efficiency, particularly lacking research on the cost channel within the Chinese context. Grounded in agency theory and technological innovation theory, we propose four hypotheses: Digital transformation significantly enhances corporate cost efficiency (H1); Financing constraints weaken the promoting effect of digital transformation on cost efficiency (H2); The effect of digital transformation is stronger in high-technologyintensive industries (H3); Property rights nature moderates the effect of digital transformation (H4). Empirical results indicate that digital transformation has a significant positive impact on cost efficiency, but this effect is attenuated in contexts of high financing constraints or non-technologyintensive industries. The research conclusions enrich the theoretical perspective on the relationship between digital transformation and corporate performance and provide insights for enterprises implementing digital strategies and for governments formulating relevant policies.