Government Digital Attention and Firm-Level Total Factor Productivity: Evidence from China

Using a sample of Chinese listed firms covering 2007 to 2021 and hand-collected data, this paper investigates whether government digital attention affects firm-level total factor productivity. The findings reveal that attention paid by government on digit-related issues is positively associated with firm productivity. Our results are robust to a battery of sensitivity tests using alternative measures of government digital attention and firm-level total factor productivity. In addition, our results still stand after adopting two-stage least square regression procedure, firms fixed effects models and placebo tests to address the potential endogeneity issue. Further tests show that government digital concern helps to improve the digital infrastructure, stimulate the corporate digital transformation and enhance the corporate innovation, thus in turn enhancing the firm productivity. The positive effect of government digital concern on firm-level TFP is more pronounced in non-stated-firms and small firms. The digital finance and marketization level mitigate the positive association between government digital attention and corporate TFP.