Sustainable Cities and Society 81 (2022) 103829

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Sustainable Cities and Society

journal homepage: www.elsevier.com/locate/scs

Can digital finance help increase the value of strategic

emerging enterprises?
Xuan Tang, Shengtao Ding, Xing Gao *, Tianqi Zhao
School of Management, Guangzhou University, China

A R T I C L E I N F O A B S T R A C T

Keywords: This paper uses the data of A-share strategic emerging enterprises in Shanghai and Shenzhen Stock Exchanges
Digital finance from 2011 to 2018 to explore the impact of digital finance on the value of strategic emerging enterprises. It is
Enterprise value found that the development of digital finance has a structural driving effect on the value of strategic emerging
Environmental regulation
enterprises. It shows that the driving impact caused by the depth of use of digital finance is more evident than the
Strategic emerging industries
coverage of digital finance. At the same time, it is more apparent in the low degree of marketization, nonstate-
owned enterprises, and central and western regions, highlighting the inclusive characteristics of digital finance.
Mechanistic research shows that digital finance can enhance the value of strategic emerging enterprises through
three paths: supplementary funds, reducing risk, and promoting innovation, thereby realizing a sustainable so­
ciety. In particular, the impact of administrative mandatory environmental regulations on digital finance and the
importance of strategic emerging enterprises presents an inverted U-shaped relationship.

1. Introduction emerging industries have obvious technical characteristics and require

At present, the world economic and political patterns are acceler­
ating evolution in China’s economy, which is shifting from a high-speed
growth stage to a high-quality development stage. Strategic emerging
industries based on major technological breakthroughs and develop­
ment needs have become China’s new competitive advantage and the
decisive force to achieve leapfrog development (Forbes and Kirsch 2011;
Lv 2019). Looking at the development trend at home and abroad,
developed countries and major emerging economies are stepping up the
layout of strategic emerging industries, such as the United States
implementing the strategy of "reindustrialization" and launching the
"Advanced Manufacturing Partnership Program,” Germany launching
"Industry 4.0" and Japan launching the "Fourth Industrial Revolution"
program. Domestically, the “Outline of the 14th Five-Year Plan for Na­
tional Economic and Social Development and Vision 2035 of the Peo­
ple’s Republic of China” introduced the following concept: "Focus on
seizing the opportunities of future industrial development, cultivating
leading and pillar industries, and promoting the integration, clustering
and ecological development of strategic emerging industries, with the
added value of strategic emerging industries accounting for more than
17% of GDP." Strategic emerging industries are in urgent need of
breakthrough development. However, as a high-tech industry, strategic
huge and continuous R&D investment support. At the same time, the
return period is long and uncertain, which makes strategic emerging
industries face high financing costs and low-end technology. The dual
dilemma of innovation severely restricts the development potential and
corporate value of strategic emerging enterprises (Li and Zheng 2016;
Wang, Luo and Liu 2019).
Generally speaking, enterprise value refers to the value of the en­
terprise itself, which is the market evaluation of the tangible and
intangible assets of the enterprise. It is closely related to the financial
decision-making of the enterprise, and reflects the time value, risk and
sustainable development ability of the enterprise’s funds. How to solve
the development problems of strategic emerging enterprises and
enhance the value of strategic emerging industries? Looking at the
practical experience of foreign developed countries, we can see that the
development of any industry is inseparable from financial support, and
the adequate supply of finance will directly affect the sustainable
development of economic entities (enterprises)(Eisenhardt and
Schoonhoven 1990; Huang 2018), and the same is true for strategic
emerging industries. As far as China’s domestic development situation is
concerned, due to the long-term structural imbalance in the traditional
financial system, the lack of financial supply leads to misallocation of
resources, which largely restricts the development potential of strategic

* Corresponding author.
E-mail address: xinggao.gx@foxmail.com (X. Gao).

https://doi.org/10.1016/j.scs.2022.103829
Received 30 December 2021; Received in revised form 1 March 2022; Accepted 8 March 2022
Available online 16 March 2022
2210-6707/© 2022 Elsevier Ltd. All rights reserved.
X. Tang et al.
Fig. 1. Theoretical frame diagram of digital finance and enterprise value.
emerging industries. With the vigorous development of emerging tech­
nologies such as big data, cloud computing, blockchain, and artificial
intelligence and the continuous integration of traditional finance and
emerging technologies, digital finance1 came into being. The most
typical features of digital finance are sharing, convenience, low cost, and
low threshold. First of all, digital finance can alleviate the phenomenon
of information asymmetry with the help of digital technologies such as
big data and cloud computing (Demertzis, Merler and Wolff 2018),
accurately identify enterprises with sustainable development potential
(such as strategic emerging enterprises) and give them financial support,
which can reduce strategic emerging enterprises. The search cost and
transaction cost of enterprises alleviate the high financing cost dilemma
of strategic emerging enterprises to a certain extent. For example,
electronic payment makes money electronic, greatly reduces the cost of
financial transactions, not only making financial services more popular
but also giving birth to many new entrepreneurial opportunities, such as
e-commerce and online and offline integration (O2O) (Pierrakis and
Collins 2013; Mollick and Kuppuswamy 2014; Grossman and Tarazi
2014). Secondly, with the support of underlying emerging technologies,
digital finance can provide strategic emerging enterprises with refined
(data) technical analysis based on massive production data and market
data, which can help enterprises formulate reasonable production plans
and identify the most promising areas of technological innovation.
Optimize the path, improve the efficiency of resource allocation and risk
management and control, and solve the dilemma of low-end techno­
logical innovation of strategic emerging enterprises.
A survey of mainstream literature at home and abroad found that the
academic community only carried out relevant research on digital
finance, enterprise value and strategic emerging industries, such as
capital structure(Hu 2002), corporate governance (Pan 2004),
1
Digital finance, the People’s Bank of China and other 10 ministries and
commissions have defined "Internet finance" (a new Financial business model in
which traditional Financial institutions and Internet enterprises use Internet
technology and INFORMATION and communication technology to realize
capital financing, payment, investment and information intermediary services)
and Financial Stability Board’s definition of "fintech" (the use of technology to
promote financial innovation and the formation of business models, technology
applications, business processes and innovative products that have a significant
impact on financial markets, institutions and financial services) is essentially
similar.
2
Sustainable Cities and Society 81 (2022) 103829
managerial characteristics(Lee et al. 2018; Bertrand and Schoar 2003;
Chen, Podolski and Veeraraghavan 2015), taxation differences (Gaert­
ner, Hoopes and Williams 2020; Wagner, Zeckhauser and Ziegler 2018;
Wu, Lv and Ni 2021), family control(Claessens, Djankov and Lang 2000;
Chu 2011; Villalonga and Amit 2020), accounting information trans­
parency(Li and Tan 2019), carbon emission information disclosure
(Krueger 2015; Liu et al. 2021), etc. How do they affect enterprise value;
digital finance affects economic growth(Chen and Zhang 2021; Jiang
et al. 2021), urban-rural gap (Ji et al. 2021), regional entrepreneurship
(Xie, Wang and Zhao 2020), capital market stability(Ozili 2018), en­
terprise innovation(Han and Gu 2021), etc. influence; the impact of
government subsidies(Lu, Wang and Zhang 2014), tax incentives(Chu,
Yang and Song 2016) on strategic emerging industries. Few scholars
have carried out systematic research on digital finance and enterprise
value, especially in strategic emerging industries. Therefore, there is
sufficient research space for this paper.
Specifically, this paper combines the unique attributes of strategic
emerging industries to build a theoretical analysis framework with
digital finance as the starting point. On this basis, a variety of mea­
surement methods are used to test the impact of digital finance on the
value of strategic emerging enterprises and its mechanism. The research
results show that digital finance significantly promotes the value of
strategic emerging enterprises and has structural characteristics. Digital
finance plays an important role in strategic emerging enterprises mainly
by alleviate the financing dilemma, reducing operational risks and
promoting innovation.
Differentiating from the existing research, this paper strives to make
some contributions in the following aspects: (1) Verify the logical rela­
tionship between digital finance and the value of strategic emerging
enterprises and reduce the dimension of the digital finance index to
check whether it has structural effects, and using instrumental variable
and other methods to test. (2) Using the mediation effect model, this
paper demonstrates the functional mechanism of digital finance on the
value of strategic emerging enterprises from three angles: financing
constraint-financial cost, financial leverage-financial risk, and techno­
logical innovation-digital transformation. (3) Carbon emissions and
environmental regulations are incorporated into the "Digital Finance-
Enterprise Value" framework to explore the effective path between in­
dustrial development and environmental governance.
The remainder of the article is organized as follows Section 2. ana­
lyzes the theoretical mechanism between digital finance and value of
strategic emerging enterprises Section 3. presents the index system, data
X. Tang et al.
sources, and analysis model for representing the regression variables in
detail, and Section 4 describes and analyzes the empirical results Sec­
tion 5. describes the transmission mechanism of digital finance affecting
enterprise value and robustness test Section 6. discusses the environ­
mental regulation into the research framework. Finally, Section 7 pre­
sents the Conclusions along with some policy suggestions.
2. Theoretical discussion
In essence, digital finance combines finance and digital technology,
and it is an effective supplement to traditional finance. It is a business
model for conventional financial institutions and internet enterprises to
use digital technology for financing, payment, investment, and other
innovative financial services (Lee and Shin 2018; Puschmann 2017;
Gomber et al. 2018). Strategic emerging industries have the character­
istics of significant capital demand, long payback periods, and high
uncertainty of future development. Theoretically, digital finance can
alleviate the practical problems of strategic emerging industries, such as
capital gaps, uncontrollable risks, and technical bottlenecks. Therefore,
this paper will explore the influence mechanism of digital finance on the
value of strategic emerging enterprises from the above three angles
(Fig. 1).
Digital financial development can alleviate the financing difficulties
of strategic emerging enterprises, reduce economic costs, and thus
enhance the value of strategic emerging enterprises. With the help of
digital technology, digital finance can mine massive data from multiple
dimensions and sources and clean and collate massive data in real-time
based on low cost and low risk (Gomber et al. 2018), visually present the
soft information of enterprises through data visualization, comprehen­
sively evaluate the characteristics of enterprises, significantly reduce the
information asymmetry between "financial institutions-business en­
tities" and improve the high-risk premium caused by information
asymmetry in traditional finance (Kaplan and Luigi 1997). At this time,
financial institutions no longer determine the allocation of credit re­
sources by asset scale, collateral, credit, and other indicators but can
effectively identify enterprises with real development potential (Zhu
2019) (such as strategic emerging enterprises), improve the credit
allocation mechanism and improve the financing dilemma of strategic
emerging enterprises (Laeven, Levine and Michalopoulos 2015). As a
result, the internal production funds of strategic emerging enterprises
increase, the quality, and efficiency of production activities are guar­
anteed, and the enterprise value steadily improves.
Digital financial development can reduce the financial leverage of
strategic emerging enterprises, improve financial stability, and then
enhance the value of strategic emerging enterprises. Financial in­
stitutions generally believe that strategic emerging enterprises are risky.
Even if some enterprises have good development prospects, they are
constrained by the long search time and high-risk identification cost.
Financial institutions are less willing to lend credit funds to strategic
emerging enterprises, which makes strategic emerging enterprises face
financial exclusion. Some enterprises take risks and choose to obtain
funds by adding leverage and investing in financial products, which
virtually aggravates the financial risks of enterprises and brings hidden
dangers to the development of enterprises. With the support of artificial
intelligence, big data technology, internet technology, distributed
technology, and blockchain, on the one hand, digital finance can gather
financial resources in the market and increase financial supply (Xie
et al. 2018); on the other hand, financial needs can be identified at low
cost and low risk by technological advantages (Huang and Huang 2018).
When the economic dilemma of strategic emerging enterprises is alle­
viated, the initial motivation of enterprise management is reduced by
increasing leverage and investing in financial products. The internal
financial situation of enterprises tends to be stable, which is conducive
to promoting enterprise value.
Digital financial development can help strategic emerging enter­
prises improve their innovation ability, carry out digital transformation,
3
Sustainable Cities and Society 81 (2022) 103829
and enhance the value of strategic emerging enterprises. First, with
technical support, digital finance can broaden the financing channels of
strategic emerging enterprises (such as smart investment and supply
chain finance, etc.) and provide financial support for their research and
development (Fuster et al. 2019; Frost et al. 2019; Gambacorta et al.
2019; Chod et al. 2020); second, emerging technologies such as the big
data, artificial intelligence, cloud computing and blockchain included in
digital finance can gather massive data information and form a data
warehouse in a short time, which can reduce the search cost, traceability
cost, and certification cost of strategic emerging enterprises, and at the
same time improve the flexibility of production, supply chain coordi­
nation, and risk management and control ability(Goldfarb and Tucker
2019). Strategic emerging enterprises can continuously optimize inno­
vation strategies while improving resource use quality and efficiency
and providing guarantees for technological innovation. The deep inte­
gration of digital finance and the real economy will not only create a
"technology dividend" but also intensify market competition, improve
the subjective initiative of strategic emerging enterprises to carry out
digital transformation, make them break through the technical bottle­
neck, continuously upgrade iteratively, and enhance the development
potential of enterprises.
Based on the above analysis, this paper proposes the following
research hypothesis:
H1: Other things being equal, digital finance can effectively enhance
the value of strategic emerging enterprises.
Digital finance has revolutionized the traditional development
model and is an innovative product. It can substantially promote the
development of strategic emerging industries. In the context of tech­
nological change and intensified competition, how to strengthen digital
finance to support the development of strategic emerging industries is
also a practical issue worth exploring. Based on the non-"technical" at­
tributes of strategic emerging industries (such as sustainability, green,
etc.), this paper further incorporates environmental regulation into the
research framework to explore the possibility of the above issues.
Theoretically, the mechanism of digital finance, environmental
regulation and enterprise value is mainly reflected in two aspects. On the
one hand, after the government implements environmental regulation, it
will send environmental governance signals to the market. Industries
with energy-saving, low-carbon and green characteristics will become
the favored objects of the market (financial institutions). New energy,
new materials and new energy vehicles under strategic emerging in­
dustries are highly consistent with the above characteristics and once
became key industries for development. At this time, digital finance can
quickly capture the market development needs by virtue of cutting-edge
technologies such as big data and cloud computing, reasonably predict
the development prospects of strategic emerging enterprises based on
digital technology, provide financial support for strategic emerging
enterprises with sustainable development ability, and increase the cash
flow scale of strategic emerging enterprises, help strategic emerging
enterprises to enhance enterprise value. On the other hand, reasonable
environmental regulation measures can significantly promote the sus­
tainable development of cities(Nesta, Vona and Nicolli 2012; Huo et al.
2020; Yuan et al. 2016), correct the negative external effects caused by
environmental pollution and promote the green innovation develop­
ment of industries. Strategic emerging industries themselves shoulder
the national development strategic will, take seeking technological
breakthroughs as the main development direction, and are committed to
realizing green and sustainable development. Effective environmental
regulation measures will further stimulate the development potential of
strategic emerging industries, accelerate the realization of technological
innovation, and gradually be recognized by the market. In recent years,
due to the influence of policy support and other factors, China’s new
energy vehicle industry has developed rapidly. According to the statis­
tical data of China Association of Automobile Manufacturers, from 2014
to 2020, China’s new energy vehicle sales rose from 75000 to 1367000.
Digital finance itself can break through geographical boundaries,
X. Tang et al. Sustainable Cities and Society 81 (2022) 103829

Fig. 2. Sample distribution map of enterprises.

regions. As shown in Fig. 32, the number of strategic emerging industry

Table 1
subsectors is the largest in the new generation of information technology
Sample distribution quantity of enterprises.
industry enterprises, followed by biology industry enterprises.
Province Quantity Province Quantity Province Quantity

Guangdong 186 Sichuan 35 Jilin 15

Jiangsu 128 Fujian 34 Chongqing 15 3.2. Regression variables
Zhejiang 125 Henan 31 Shaanxi 14
Beijing 92 Hubei 30 Tianjin 14
3.2.1. Enterprise value (dependent variables)
Shanghai 79 Hunan 27 Jiangxi 13
Shandong 68 Liaoning 21 Guizhou 12 Enterprise value (TobinQ). The literature research on enterprise
Anhui 36 Hebei 20 Heilongjiang 10 value at home and abroad mainly adopts the methods of cash flow
model, economic added value (EVA), TobinQ value, relative valuation
Note: The number of other provinces is less than 10.
and so on. Based on the availability and applicability of data and
referring to the research of Wang (2003), this paper selects TobinQ value
provide external resource support for strategic emerging enterprises and
to measure enterprise value. When TobinQ value is large, it indicates
enhance their enterprise value. Appropriate environmental regulation
that the development prospect of the enterprise is relatively good. At this
measures will enable financial institutions and external investors to take
time, investors often invest in the enterprise to obtain income; When the
a positive attitude towards strategic emerging enterprises. Relying on
TobinQ value of the enterprise is low, it indicates that the operation and
digital technology, digital finance can accelerate the organic combina­
development of the enterprise is not optimistic, and investors lose con­
tion with strategic emerging industries and help the development of
fidence in the development of the enterprise and are unwilling to invest.
strategic emerging enterprises.
The larger the value, the higher the enterprise value.

3. Research Methods 3.2.2. Digital finance

3.1. Data sources
In this paper, 1,058 listed enterprises in the A-share strategic
emerging industries in Shanghai and the Shenzhen Stock Exchange are
taken as research objects. According to the starting years of the digital
financial index (2011) and the latest full version data, the panel data set
from 2011 to 2018 is finally constructed. The sample screening rules are
as follows: first, exclude the listed ST and delisted enterprises during the
sample period; second, exclude financial and real estate enterprises;
third, only retain enterprises with continuous data for at least five years.
To avoid the interference of outliers, this paper carries out Winsorise on
microlevel continuous variables. The sample distribution map and dis­
tribution quantity of enterprises is shown in Fig. 2 and Table 1. Overall,
there are many strategic emerging enterprises in the eastern and central
Digital finance (DF). In this paper, with the help of the inclusive
finance Index of Digital Finance compiled by the Peking University
internet Finance Research Center, based on the data provided by Ant
Financial, this index measures the development degree of digital finance
in China’s provincial and city levels (excluding China’s Hong Kong,
Macao, and Taiwan regions)(Guo et al. 2020). In this paper, the
city-level digital financial index is taken as the proxy variable of digital
economic development, and it is normalized. This paper further
2
In Fig. 3, NEV represents new energy vehicles industry, NE represents new
energy industry, NM represents new material industry, Bio represents biology
industry, ESEP represents energy saving and environmental protection industry,
NGIT represents new generation information technology industry and HEM
represents high-end equipment manufacturing industry.

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X. Tang et al. Sustainable Cities and Society 81 (2022) 103829

Fig. 3. The number of enterprises in subsectors of strategic emerging industries.

Table 2
Variable definitions.
Variable Name Variable Calculation Method Data Source
Symbol

Enterprise Value TobinQ TobinQ = (Market value of tradable shares +Market value of nontradable shares+Debt market value)/Total CSMAR
assets
Digital Finance DF China Digital inclusive finance Index released by Peking University Digital Finance Center https://www.idf.pku.
edu.cn/
Financing Constraint SA SA = − 0.737 × Size+0.043 × Size2–0.040 × Age2 CSMAR
Financial Expense FR Financial expenses/Prime operating revenue
Rate
Financial Debt FLev (Short-term borrowing +Notes payable +Long-term liabilities due within one-year +Long-term
Leverage borrowing+Bonds payable)/Total assets
Financial Stability Z Score Z = 1.2×1+1.4×2+3.3×3+0.6×4+0.999×5a
Green Innovation Green Number of green invention patents
Digital DCG Text analysis Annual Reports
Transformation
a
X1 represents working capital/total assets;X2 represents retained earnings/total assets;X3 represents EBIT/total assets;X4 represents total market value/total lia­
bilities;X5 represents revenue/total assets. If either index is empty, the Z Score is empty.

decomposes the digital finance index into two indicators: digital finan­ the control variable group; εt is the random error term. To absorb the
cial coverage (DF-B, mainly reflected by the number of electronic ac­ related fixed effect in the regression process, this paper controls the two-
counts) and digital finance usage depth (DF-D, including but not limited way fixed effect of the "time-industry.”
to payment business and credit business, to investigate the actual This paper sets up a recursive verification equation to further iden­
number of users and measure the per capita transaction volume). tify the transmission mechanism of "digital finance-enterprise value."
Settings are as follows:
3.2.3. Control variables ∑ ∑ ∑
3.2.4 This paper includes relevant micro variables to overcome the TobinQi,t+1 = ρ0 + ρ1 DFi,t− 1 + φCVs + Year + Ind + ωi (2)
influence of missing variables. Including age, capital intensity, size, ∑ ∑ ∑
asset-liability ratio (Lev), QFII shareholding ratio (QFII), audit opinion Mediatori,t = σ0 + σ 1 DFi,t− 1 + φCVs + Year + Ind + γ i (3)
(Opin), and return on assets (ROA), all data are from the CSMAR data­ ∑ ∑
base. The variables are defined in Table 2. TobinQi,t+1 = θ0 + θ1 Mediatori,t + θ2 DFi,t− 1 + φCVs + Year
∑
+ Ind + φi (4)
3.3. Regression model construction
In the regression of the mediating effect, the definition of variables is the
To test the impact of digital finance on the value of strategic same as above. To improve the credibility of the study, the following
emerging enterprises, the following model is constructed: processing is carried out in this paper: Put TobinQi,t+1 ahead by one
∑ ∑ ∑ period; Mediatori,t adopts the current value; Delay DFi,t− 1 by one phase;
TobinQi,t = α0 + β1 DFi,t + φCVs + Year + Ind + εi (1) CV is consistent with above.
In Model (1), enterprise value (TobinQi,t ) is the explained variable of
this paper; digital finance (DFi,t ) is the core explanatory variable; CV is

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X. Tang et al. Sustainable Cities and Society 81 (2022) 103829

Table 3
Correlation test.
TobinQ DF Age Capital Size Lev QFII Opin ROA

TobinQ 1
DF 0.05*** 1
Age − 0.09*** 0.36*** 1
Capital 0.13*** 0.11*** − 0.08*** 1
Size − 0.46*** 0.26*** 0.27*** − 0.12*** 1
Lev − 0.46*** 0.07*** 0.22*** − 0.21*** 0.54*** 1
QFII 0.03** 0.05*** 0.04*** − 0.08*** 0.14*** 0.02* 1
Opin 0.0100 − 0.07*** − 0.04*** − 0.10*** − 0.0100 − 0.10*** 0.02** 1
ROA 0.31*** − 0.14*** − 0.09*** − 0.22*** − 0.05*** − 0.34*** 0.15*** 0.19*** 1

Note: ***, ** and * represent significance levels of 10%, 5% and 1%, respectively.

Table 4
Descriptive statistics.
N Mean S.D. Min Max

TobinQ 7861 2.266 1.748 0.191 9.106

DF 7861 188.3 62.82 23.88 303.0
DF-B 7861 188.0 59.68 4.490 290.3
DF-D 7861 186.0 67.13 12.49 325.7
Age 7861 2.737 0.365 1.609 3.434
Capital 7861 2.310 1.558 0.381 13.78
Size 7861 21.85 1.124 19.10 27.31
Lev 7861 0.377 0.189 0.053 0.861
QFII 7861 0.080 0.344 0.000 2.520
Opin 7861 0.983 0.128 0.000 1.000
ROA 7861 0.042 0.051 − 0.166 0.192

Fig. 4. Trend chart of digital finance and enterprise value from 2011 to 2018.

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X. Tang et al. Sustainable Cities and Society 81 (2022) 103829

Table 5
Benchmark regression: the impact of digital finance on enterprise value.
M(1) M(2) M(3) M(4)
TobinQ TobinQ TobinQ TobinQ

DF 0.005** 0.003**
(2.434) (2.178)
DF-B 0.003***
(2.933)
DF-D 0.012***
(19.65)
Age 0.031 0.034 0.296***
(0.366) (0.402) (3.541)
Capital 0.041* 0.036* 0.071***
(1.871) (1.691) (3.218)
Size⋅ 0.617*** 0.618*** 0.565***
(− 20.19) (− 20.68) (− 19.07)
Lev 1.290*** 1.261*** 1.333***
(− 8.433) (− 8.333) (− 8.198)
QFII 0.215*** 0.217*** 0.213***
(3.539) (3.646) (3.134)
Opin 0.689*** 0.745*** 0.687***
(− 4.296) (− 4.709) (− 3.840)
ROA 8.864*** 8.556*** 8.092***
(13.39) (12.93) (11.76)
Constant − 0.030 15.72*** 15.26*** 13.15***
(− 0.050) (20.01) (19.64) (20.73)
Year YES YES YES YES
Ind YES YES YES YES
N 7861 7861 7861 7861
Adj.R2 0.275 0.537 0.550 0.444

Note: ***, ** and * represent significance levels of 10%, 5% and 1%, respectively. Clustering standard robust errors are used.
The following table is the same, so it will not be repeated here.

Table 6
Heterogeneity: Inclusive characteristics of the influence of digital finance on enterprise value.
M(1) M(2) M(3) M(4) M(5) M(6)
TobinQ TobinQ TobinQ TobinQ TobinQ TobinQ

DF 0.006*** 0.012*** 0.002 0.017*** 0.005*** 0.013***

(3.606) (15.66) (1.162) (25.33) (2.637) (11.69)
Group by High marketization Low marketization state-owned Nonstate-owned East Midwest
CVs YES YES YES YES YES YES
Year YES YES YES YES YES YES
Ind YES YES YES YES YES YES
N 5425 2436 2262 5452 5696 2165
Adj.R2 0.553 0.476 0.541 0.464 0.549 0.515

4. Results
4.1. Correlation analysis
Table 3 tests the correlation of the variables studied in this paper.
The results show that there is a positive correlation between digital
finance (DF) and enterprise value (TobinQ) at the 1% significance level,
and the correlation coefficient is 0.05, indicating that there is a signif­
icant correlation between digital finance and enterprise value, and it
meets the monotonicity hypothesis. The relevant variables such as Age,
Capital and Size basically passed the significance level of 1%. After
testing, the variance inflation factor (VIF) of each variable is less than
103, indicating that there is no multicollinearity problem between var­
iables (more details refer to Table A1 in Appendix A).
variables. The statistical results show that strategic emerging enter­
prises’ average value (TobinQ) is 2.266. The maximum value is 9.106,
indicating significant differences in enterprise value levels among
different enterprises. During the sample period, the average value of
digital finance (DF) is 188.3, and the maximum value is 303.0. There are
apparent differences in the development level of digital finance among
different regions. Divide digital finance into digital financial coverage
(DF-B) and digital financial uses depth (DF-D). Overall, the average
digital financial coverage is slightly larger than the average digital
financial use depth, but the digital financial use depth is more discrete.
As shown in Fig. 4, from 2011 to 2015, the value of strategic
emerging enterprises and digital finance showed a synchronous upward

4.2. Descriptive statistic

Table 4 reports the descriptive statistical characteristics of the main

3
Due to space reasons, the VIF value of each variable is not shown in the
article.

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X. Tang et al. Sustainable Cities and Society 81 (2022) 103829

Table 7
Heterogeneity: Inclusive characteristics of the influence of digital finance on the value of strategic emerging enterprises.
M(1) M(2) M(3) M(4) M(5) M(6) M(7)
TobinQ TobinQ TobinQ TobinQ TobinQ TobinQ TobinQ
New energy New New Biology Energy-saving and environmental New-generation information High-end equipment
vehicles energy material protection technology manufacturing

DF 0.013*** 0.013*** 0.011*** 0.012*** 0.010*** 0.019*** 0.009*

(9.436) (8.403) (10.90) (10.26) (2.748) (16.48) (1.907)
CVs YES YES YES YES YES YES YES
Year YES YES YES YES YES YES YES
Ind YES YES YES YES YES YES YES
N 1067 910 1121 1520 831 1725 675
Adj. 0.492 0.529 0.551 0.536 0.554 0.470 0.608
R2

trend. Still, after 2015, digital finance deviated from the development
Table 8
trend of the value of strategic emerging enterprises4. Under this back­
Transmission Channels of Digital Finance to Enterprise Value: Financing
ground, how the actual relationship between digital finance and the
Constraints-Financial Expenses.
value of strategic emerging enterprises is worth studying intensely. The
following article will carry out systematic empirical research on this M(1) M(2) M(3) M(4) M(5)
TobinQ SA TobinQ FR TobinQ
issue.
DF 0.005*** − 0.000** 0.005*** − 0.000*** 0.005***
(2.933) (− 2.441) (2.720) (− 4.835) (3.137)
4.3. Benchmark regression analysis SA − 0.798***
(− 4.999)
FR − 2.796**
Table 5 Regression is carried out by the progressive method to (− 2.160)
explore the logical relationship between digital finance and the value of CVs YES YES YES YES YES
strategic emerging enterprises. In M (1), only the "time-industry" fixed Sobel 0.001*** 0.000***
effect is controlled. The results show that digital financial (DF) devel­ Year YES YES YES YES YES
Ind YES YES YES YES YES
opment can effectively promote the value of strategic emerging enter­
N 5507 7784 5504 7787 5507
prises (TobinQ); the regression coefficient is 0.005, and it passes the Adj.R2 0.546 0.419 0.552 0.437 0.539
significance test of 1%. In M (2), when the control variable group is
added, the empirical results are still consistent (the coefficient is 0.003,
which passes the significance test of 1%). Research hypothesis 1 was processing ability, risk control ability and strategic decision-making
verified. It means that digital finance can provide growth impetus for ability of strategic emerging enterprises, provide multi-directional sup­
strategic emerging enterprises, break through the current dilemma of port for strategic emerging enterprises to carry out digital trans­
"low-end locking" in the global technology chain, and enhance their formation in accordance with market trends (such as early capital
enterprise value. On the one hand, digital finance is a new type of investment, medium-term equipment iterative upgrading and later risk
financial business combining digital technology and traditional finance. control), help strategic emerging enterprises realize technological
It can effectively alleviate the passive situation of insufficient supply of innovation and improve the value of their tangible and intangible assets.
traditional finance, increase the capital stock in the market, alleviate the In M (3) and M (4), this paper further divides digital finance into two
financing difficulties of strategic emerging enterprises to a certain indicators: digital finance coverage (DF-B) and digital finance usage
extent, reduce the financing costs of strategic emerging enterprises, and depth (DF-D). Whether the range of digital finance is expanded or the
enable strategic emerging enterprises to increase revenue and reduce application of digital financial services is deepened will significantly
expenditure, reasonably allocate internal funds to production projects to enhance the value of strategic emerging enterprises. As shown in
improve their enterprise value. On the other hand, the underlying Table 5, the digital financial coverage breadth (DF-B) and the digital
technology of digital finance can alleviate the information asymmetry financial use depth (DF-D) have a favorable driving effect on the value of
between strategic emerging enterprises and the outside world, enhance strategic emerging enterprises. Still, the driving impact of digital
their contact with the outside world, obtain more market information financial use depth on the value of strategic emerging enterprises is
and more development opportunities, inhibit the behavior and decision- more substantial (0.012> 0.003). This shows that in the development
making of strategic emerging enterprises forced to add financial process of digital finance, it is necessary to continuously promote the
leverage in the past to a certain extent, and reduce the financial risk of deep integration of digital technology and the real economy to promote
strategic emerging enterprises, provide internal conditions for the value of microenterprises effectively.
enhancing enterprise value. In addition, with the help of digital tech­
nology, digital finance can not only bring financial support to strategic 4.4. Heterogeneity analysis
emerging enterprises, but also effectively improve the information
The relationship of "digital finance-enterprise value" has been
confirmed in the previous article, but will different scenarios have dif­
4
After consulting relevant information, the author finds that the possible ferentiation effects? For example, will the external financial environ­
reason for the sudden drop of enterprise value (TobinQ) in 2015 is that en­ ment affect the release of digital finance? Will there be other effects due
terprise value (TobinQ) is an indicator reflecting the performance of enterprises
to the difference in the enterprise’s conditions? Therefore, this paper
in the capital market. In 2015, the capital market experienced a systemic risk
further regresses the whole sample according to the degree of marketi­
shock, with a rare continuous plunge from June to August. The Shanghai
Composite Index and the Growth Enterprise Market Index fell by more than zation, enterprises’ nature, and regional attributes (Table 6).
40% and 50% at a high point, respectively, which caused the stock price of The empirical results show that under different degrees of marketi­
enterprises to fall. At the same time, due to contagion effect and lag, the adverse zation (M(1)~ M(2)), digital finance has a positive effect on the value of
impact of the stock market crash on enterprises lasted for a long time. www.gua strategic emerging enterprises. Still, the positive driving impact is more
ncha.cn/economy/2015_12_31_346578.shtml. prominent (DF regression coefficient in M(2) is significantly positive).

8
X. Tang et al. Sustainable Cities and Society 81 (2022) 103829

Table 9 Because traditional finance cannot meet the financing needs of enter­
Transmission channel of digital finance to enterprise value: financial debt prises in strategic emerging enterprises, digital finance can increase
leverage-financial stability. financial supply, ease the financing difficulties of enterprises in strategic
M(1) M(2) M(3) M(4) M(5) emerging enterprises, reduce business risks, improve innovation effi­
TobinQ FLev TobinQ Z Score TobinQ ciency and help the development of strategic emerging industries.
DF 0.005*** − 0.000*** 0.012*** 0.021*** 0.004*** Therefore, from the perspectives of "supplementary funds,” "reducing
(2.933) (− 3.372) (18.73) (2.649) (2.635) risk," and "promoting innovation,” this paper adopts three channels:
FLev − 0.664** "financing constraint-financial expenses,” "financial leverage-financial
(− 2.372)
stability," and "green innovation-digital transformation" for
Z Score 0.080***
(15.47) identification.
CVs YES YES YES YES YES The reasons for choosing these three types of intermediary variables
Sobel 0.000* 0.002*** are as follows: first, as mentioned above, digital finance can identify and
Year YES YES YES YES YES provide financial support to enterprises with development potential by
Ind YES YES YES YES YES
virtue of cutting-edge technologies such as big data and cloud
N 5507 7787 5507 7775 5498
Adj.R2 0.546 0.564 0.491 0.502 0.624 computing. At the same time, it can also broaden financing channels for
enterprises. When enterprises have multiple choices, it can also reduce
their financing costs, it can improve the high financing cost dilemma of
Table 10
strategic emerging industry enterprises to a great extent, so as to provide
Transmission Channel of Digital Finance to Enterprise Value: Green Innovation- financial support for their technological breakthrough. Second, when
Digital Transformation. the plight of high financing costs of strategic emerging enterprises is
alleviated, it can optimize the financial behavior of enterprises, inhibit
M(1) M(2) M(3) M(4) M(5)
TobinQ Green TobinQ DCG TobinQ the "opportunistic" motivation of enterprise management, reduce the
leverage level of enterprises, improve the financial stability of enter­
DF 0.005*** 0.001*** 0.012*** 0.007*** 0.005***
(2.933) (4.124) (18.75) (4.748) (2.714)
prises, and then provide assistance for the promotion of the value of
Green 0.050** strategic emerging enterprises. Third, after the financing difficulties and
(2.004) financial risks of strategic emerging enterprises are eased slightly, the
DCG 0.114*** internal resource allocation of the enterprise will gradually become
(4.565)
reasonable, and the internal funds will focus on the main business pro­
CVs YES YES YES YES YES
Sobel 0.000** 0.000*** duction and vigorously support R&D activities. When R&D funds are
Year YES YES YES YES YES abundant and the financial situation is stable, strategic emerging en­
Ind YES YES YES YES YES terprises will have a greater chance to achieve core technology break­
N 5507 7787 5507 7787 5507 throughs, crack the state of low-end technological innovation and help
Adj.R2 0.546 0.281 0.490 0.510 0.543
enhance the value of strategic emerging enterprises.
Table 8 shows that digital finance can alleviate the financing diffi­
When the attributes of enterprises are different (M(3)~ M(4)), the culties of strategic emerging enterprises (DF coefficient in M(2) is
promotion effect of digital finance on the value of strategic emerging significantly negative) and enhance the value of strategic emerging
enterprises is significant in the group of nonstate-owned enterprises (the enterprises (SA coefficient in M(3) is significantly negative). At the same
regression coefficient of DF in M(4) is significantly positive). When en­ time, digital finance can effectively reduce the financial expenses of
terprises belong to different regions (M (5) ~M (6)), digital finance has a strategic emerging enterprises (DF coefficient in M(4) is significantly
positive effect on the value of strategic emerging enterprises. Still, the negative) and enhance their enterprise value (FR coefficient in M(5) is
positive driving impact is more evident in the central and western re­ significantly negative). On the one hand, digital finance can improve the
gions (DF regression coefficient in M (6) is significantly positive), information processing capacity and soft information output capacity of
highlighting the inclusive characteristics of digital finance. enterprises by virtue of digital technology, and improve the financing
In addition, strategic emerging industries include seven subsectors of availability of strategic emerging enterprises. When the financing needs
new energy vehicles, new energy, new materials, biology, energy sav­ of strategic emerging enterprises are met, there will be sufficient funds
ings, environmental protection, a new generation of information tech­ to ensure the efficient operation of R&D activities and realize techno­
nology, and high-end equipment manufacturing. To investigate the logical breakthroughs, so as to enhance the value of enterprises. On the
effect of digital finance on strategic emerging industries in more detail, other hand, the underlying technology of digital finance can enable
this paper further subdivides the whole sample into subsectors to external financing institutions to comprehensively, quickly and multi­
explore the economic impact of digital finance on different sub­ dimensional obtain and analyze the financial information of strategic
industries. The results (Table 7) show that digital finance plays a sig­ emerging enterprises, so as to improve the possibility of enterprises to
nificant role in promoting subindustries of strategic emerging industries. obtain funds. For strategic emerging enterprises, this will directly reduce
Among them, digital finance has the most important economic effect on their search costs (financial expenses). At this time, the available funds
the new generation of the information technology industry, followed by within the enterprise will increase and the R&D investment will be
new energy and new energy vehicles. The regression coefficients were guaranteed, which will help to enhance the value of strategic emerging
0.019, 0.013, and 0.013. enterprises.
Table 9 shows that digital finance can reduce the financial debt
5. The transmission mechanism of digital finance affecting leverage of strategic emerging enterprises (DF coefficient in M(2) is
enterprise value: “Supplementary funds,” “reducing risk,” and significantly negative) and then enhance the enterprise value (FLev
“promoting innovation” coefficient in M(3) is significantly negative). At the same time, digital
finance can reduce the financial risks of strategic emerging enterprises
5.1. Mechanism test (DF coefficient in M(4) is significantly positive), thus contributing to the
improvement of enterprise value (Z Score coefficient in M(5) is signifi­
The previous section mainly focuses on "digital finance-enterprise cantly positive). On the one hand, when the development of digital
value", and this section will reveal the mechanism between them. finance is better, the loan process of financial institutions tends to be
optimized, which means that enterprises can obtain more convenient

9
X. Tang et al. Sustainable Cities and Society 81 (2022) 103829

Table 11 for green innovation activities, such as optimizing the labor structure,
Digital finance, environmental regulation, and enter­ iteratively updating production equipment, and increasing green inno­
prise value. vation output, so as to achieve sustainable development (Peng et al.
M(1) 2021). After enjoying the “technological dividend”, strategic emerging
TobinQ enterprises will further realize the necessity of digital and intelligent
DF 0.010* development, and then accelerate their digital transformation. Enter­
(1.710) prises adopt resource-efficient and green strategic approaches to boost
DF_sqr 3.00e-06 the value of strategic emerging enterprises to achieve sustainable
(0.187)
development (Ali et al. 2019; Feng et al. 2022). In summary, digital
CER − 0.100*
(− 1.666) finance can drive the value of strategic emerging enterprises through
DF × CER 0.002*** three paths: “supplementary funds,” “reducing risk,” and “promoting
(3.191) innovation”.
DF_sqr × CER − 8.42e-06***
(− 4.205)
Year YES
5.2. Robustness check
Ind YES
N 7788
Adj.R2 0.425 This study also implemented a series of robustness tests and endog­
enous treatment in the regression models. This paper mainly uses the
instrumental variable method for testing to alleviate the endogeneity
and fast financial services and effectively alleviate the financing diffi­ problems caused by reverse causality (more details refer to Table A2,
culties of enterprises. At this time, the increase of internal cash flow of Table A3, and Table A4 in Appendix A). From their analysis, it can be
enterprises will reduce the unnecessary leverage level, and the available found that the estimation coefficient is still significantly positive, which
funds for research and development activities will increase, which will shows that the research conclusion of this paper is highly robust.
help to improve the value of enterprises. On the other hand, with the
help of digital technology, digital finance can break the time and space
6. Discussion
constraints, bring low-cost financial support to enterprises, and stabilize
the financial situation of enterprises to a certain extent, so as to provide
On October 24th, 2021, the Central Committee of the Communist
continuous financial support for enterprises’ R&D activities and pro­
Party of China and the State Council issued the Opinions on Completely,
mote the value of enterprises.
Accurately, and Comprehensively Implementing the New Development
Table 10 shows that digital finance can promote the green innova­
Concept to Do a Good Job of Carbon Neutralization in peak carbon di­
tion output of strategic emerging enterprises (the DF coefficient in M(2)
oxide emissions, proposing to accelerate the development of a new
is significantly positive) and enhance enterprise value (the green coef­
generation of strategic emerging industries such as information tech­
ficient in M(3) is significantly positive). Furthermore, the development
nology, biotechnology, new energy, new materials, high-end equipment,
of digital finance combined with the improvement of the green inno­
new energy vehicles, green environmental protection, aerospace, and
vation ability of strategic emerging enterprises will accelerate the digital
marine equipment. With the rapid growth of global economy, urban
transformation process of strategic emerging enterprises (DF coefficient
development has entered a new normal, and urban problems such as
in M(4) is significantly positive) and help enterprises to improve their
environmental pollution is exploding(Wang, Cao and Yu 2021; Cao
value (DCG coefficient in M(5) is significantly positive). When digital
et al. 2021; Tang et al. 2020; Li et al. 2018; Zhou et al. 2021). It is urgent
finance significantly improves the financing dilemma of enterprises in
to promote the deep integration of emerging technologies such as the
strategic emerging enterprises, it will provide an essential solid support
internet, big data, artificial intelligence, and fifth-generation mobile

Fig. 5. Digital finance, environmental regulation and the moderating effect of enterprise value.

10
X. Tang et al.
communications (5G) with strategic emerging enterprises to overcome
social and environmental issues related to global urbanization, so as to
achieve sustainable urban development(Kremer, Haase and Haase 2019;
Wang, Yu and Cao 2021).Under this background, this paper will include
the indicator of environmental regulation in the research framework of
"digital finance-enterprise value". Since China’s current environmental
regulation indicators are mainly command and controlled (Wang et al.
2015), this paper uses the number of administrative penalty cases to
represent command and controlled environmental regulation (CER) for
subsequent regression(Zhang et al. 2020; Zhang et al. 2021). At the same
time, considering the possible nonlinear characteristics between envi­
ronmental regulation and digital finance, the quadratic term of CER is
included in the regression equation.
Table 11 shows that CER has a moderating effect on "digital finance-
enterprise value" and presents an inverted U-shaped relationship
(Fig. 5). Specifically, when digital finance is at a low level, the gov­
ernment’s implementation of high-intensity environmental regulation
means will force the integration and development between digital
finance and strategic emerging enterprises, thus enhancing the value of
strategic emerging enterprises. When digital finance grows to a high
level, the value of strategic emerging enterprises driven by digital
finance becomes increasingly apparent. At this time, the government
should implement low-intensity environmental regulation measures to
strengthen the positive relationship.
This study also has some limitations. First, the latest digital financial
data is only 2018, and the lack of basic data greatly limits the empirical
research in relevant fields. Secondly, digital finance is a double-edged
sword. It not only improves the financial environment and promotes
the innovation of financial services, but also brings financial risks. In
view of the limited space of the article, this paper does not include
digital financial supervision into the analysis. Therefore, the future
research direction should strengthen the research on the digital financial
index system and index compilation method, and consider how to ach­
ieve the balance between financial security and financial efficiency,
create a better business environment and promote the high-quality
development of enterprises.
7. Conclusions
The development of digital finance has revolutionized the traditional
financial model, continuously integrated with the real economy, and
provided a new driving force for high-quality economic development.
After considering empirical tests such as benchmark regression and path
identification, we draw the following conclusions: (1) Digital finance
can effectively enhance the value of strategic emerging enterprises. The
driving effect caused by the development depth of digital finance is more
prominent. (2) The positive effect of digital finance on strategic
emerging enterprises is more significant in the low degree of marketi­
zation, nonstate-owned enterprises, and central and western regions. (3)
Digital finance can effectively alleviate the realistic problem of "difficult
and expensive financing" of strategic emerging enterprises, restrain their
motivation to "move away from reality to reality," and reduce financial
risks. At the same time, it will also help strategic emerging enterprises
achieve technological breakthroughs, enhance innovation ability,
accelerate the process of digital transformation and enhance the value of
strategic emerging enterprises. (4) The impact of administrative
mandatory environmental regulations on digital finance and the value of
strategic emerging enterprises presents an inverted U-shaped
relationship.
Based on the above research conclusions, this paper puts forward the
following suggestions:
First, strengthen the deep integration of digital finance and strategic
emerging enterprises. Digital finance can provide efficient financial
services for more strategic emerging entities with demand and effec­
tively enhance the value of strategic emerging enterprises. We should
actively explore the deep application of digital finance in strategic
11
Sustainable Cities and Society 81 (2022) 103829
emerging enterprises, accelerate the digital development of strategic
emerging enterprises, guide enterprises to apply digital finance, and
further promote the deep evolution of integrated development, so as to
enhance the value of strategic emerging enterprises.
Second, strategic emerging enterprises should seize opportunities for
digital finance development. Digital finance mainly enhances the value
of strategic emerging enterprises through three important mechanisms:
“supplementary funds”, “reducing risk” and “promoting innovation”.
Therefore, enterprises should make reasonable use of digital finance to
alleviate the financing constraints they face, and at the same time do a
good job in micro-risk prevention and control, and strengthen green
innovation and development, so as to achieve the goal of maximizing
enterprise value.
Third, optimize environmental regulation measures. The environ­
mental regulation measures implemented by the government have an
inverted “U” relationship between digital finance and the value of
strategic emerging enterprises. In order to maximize the policy effect,
environmental regulation measures of different intensity should be
adjusted according to the development degree of digital finance. For
example, in areas where the development level of digital finance is
slightly lower, the intensity of environmental regulation should be
appropriately strengthened. When the level of digital finance tends to be
high, the intensity of environmental regulation can be appropriately
relaxed.
Fund project
National Social Science Fund of China (18BJL065), Science and
Technology Planning Project of Guangdong Province
(2020B1010010014).
Declaration of Competing Interest
The author(s) declared no potential conflicts of interest with respect
to the research, authorship, and/or publication of this article.
Acknowledgments
The authors would like to express their gratitude to National Social
Science Fund of China (18BJL065), Science and Technology Planning
Project of Guangdong Province (2020B1010010014).
Supplementary materials
Supplementary material associated with this article can be found, in
the online version, at doi:10.1016/j.scs.2022.103829.
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