Supply chain digitization and cost of equity capital: Evidence from China

Supply chain management, which can integrate upstream and downstream resources, has been becoming the core path for manufacturing to build sustainable competitive advantages. To optimize supply chain management, China introduced pilot policies for supply chain innovation and application (SCIA) in 2018. Employing a sample of Chinese A-share listed enterprises from 2012 to 2020, we use the difference-in-difference (DID) method to examine the influence of SCIA pilot policy on the cost of equity capital(COEC). The results show that (1) Supply chain(SC) digitization can greatly reduce COEC, but there is a time-lag effect. (2) The mechanism analysis shows that SC digitization reduces COEC by improving corporate innovation capacity and information quality. (3) Heterogeneity analysis shows that the reduction effect of SC digitization on COEC is more significant in firms with lower SC digitization and high-tech firms.