Hear all parties: Peer effect of digital transformation on long-term firm investment in China

This study explores the increasing significance of digital transformation and its peer effects as key factors influencing the efficiency of long-term firm investment. A complete digital transformation dictionary is established in this study containing 179 keywords; the frequency of digital-transformation-related words is determined using textual mining technology and a reverse maximum matching algorithm. The effects of digital transformation, including peer effect, on long-term firm investment are investigated using firm-level panel data analysis. Our empirical findings demonstrate an increase in firms' digital transformation from 2011 to 2020. Digital transformation appears to significantly reduce long-term firm investment. Industrial peers' digital transformation prohibits a focal firm's long-term investment, marking a noteworthy divergence from the financial heterogeneous features of focal and peer firms. The digital transformation of industrial peers positively affects the long-term investment of focal firms by promoting an equity investment structure and an asset-light operation strategy.