Judicial informatization and digital transformation: evidence from the establishment of the internet court

Abstract

Based on data of Chinese A-share manufacturing listed companies from 2014–2021, we consider the establishment of Internet Courts (ICs) as a quasi-natural experiment and empirically examine the impact of judicial informatization (JI) on firms’ digital transformation using a double machine learning (DML) approach. Our findings suggest that JI facilitates firms’ digital transformation, while firms’ financing capacity can enhance this positive relationship. Specifically, we find that the impact of JI on digital transformation is more significant for firms that have high cash holdings, are large and mature. Our findings contribute to the understanding of the factors influencing the digital transformation of microenterprises and provide empirical evidence to assess the economic consequences of JI reforms.