Digital infrastructure and economic growth: Evidence from corporate investment efficiency

This study empirically examines the influence of digital infrastructure development on corporate investment efficiency within the context of the Broadband China policy. The study analyses a sample of Chinese listed companies from 2007 to 2021 using a difference-in-differences model, supplemented by propensity score matching and the IV methodology to assess the policy's effects on inefficient investment, overinvestment, and underinvestment. The findings indicate that the Broadband China policy significantly enhances corporate investment efficiency by mitigating the negative effects of inefficient investment and overinvestment behaviors. The effects are more pronounced in regions with more developed infrastructure. The heterogeneity analysis reveals considerable variation in the policy's impact between provincial capitals and non-capital cities, with firms located in provincial capitals deriving greater benefits from the policy. The mechanism analysis demonstrates that management efficiency mediates the policy's influence on corporate investment behavior. These findings provide theoretical and empirical support for the government's efforts to refine its digital infrastructure policies and optimize regional economic development strategies. Based on the results, we propose differentiated policy recommendations to enhance management efficiency through digital infrastructure development and address regional disparities. Future research could expand the dataset and investigate the broader implications of digital infrastructure on other corporate behaviors, such as innovation capacity and market competitiveness.