The Impact of Digital Government Construction on Cross-region Investment: Evidence from China

Abstract

This study uses a difference-in-differences framework and firm-level data from Chinese listed companies to investigate the effect of digital government construction on cross-regional investment. Big data management institutional reform is treated as an exogenous policy shock to identify the causal relationship between digital government construction and firms’ cross-regional investment behavior. The results show that digital government construction has a significant positive effect on cross-regional investment. Mechanism tests indicate that digital government construction promotes cross-regional investment by reducing firms’ external transaction costs and debt financing costs. Further analysis reveals heterogeneous effects across regions, industries, and firms. The promotion effect differs according to local government tax dependence, industry competition intensity, and corporate governance structure, such as whether the chairman concurrently serves as general manager. Robustness checks, including parallel trend testing, placebo testing, and controls for other policy interventions, support the reliability of the conclusions. The findings provide empirical evidence for advancing digital government construction and improving capital factor mobility within a national unified market.