Can corporate digital transformation alleviate financial distress?

This paper examines the impact of digital transformation on financial distress in A-share listed companies from 2012 to 2021. We find that enterprises digital transformation can significantly alleviate financial distress, and higher economic policy uncertainty will promote the role of enterprises' digital transformation to alleviate financial distress. The mechanism test shows that the digital transformation can alleviate the financial distress mainly by reducing the operational risk and easing the financing constraints. The conclusion is helpful to understand the driving effect of digital transformation on high-quality development of enterprises and evaluate the implementation effect of enterprises' digital transformation.