International Review of Financial Analysis 91 (2024) 102957

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International Review of Financial Analysis

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Maturity mismatched investment, digital financial inclusion, and digital

orientation: Evidence from China
Meng Xu a, Zhonghai Yang a, Yu-En Lin b, *, Gaobo Li c
a
School of Economics and Management, Harbin Engineering University, Harbin, Heilongjiang 150001, PR China
b
Center for Quantitative Economics, Jilin University, Changchun, Jilin 130015, PR China
c
School of Business, Beijing Open University, Beijing 100081, PR China

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

Keywords: The study examines how maturity mismatched behavior influences firms’ digital orientation, and the moderating
Maturity mismatched effect of digital financial inclusion (DFI) on maturity mismatched behavior. We analyzed a sample of over 3000
Digital orientation Chinese listed firms over the period 2011–2020 and identified the “passive mismatch view.” We found that firms’
Digital financial inclusion
maturity mismatched investment could impede their digital orientation and that DFI further weakens the
Agent conflict
Managerial risk-bearing
negative relation between firms’ maturity mismatched investment and digital orientation. We further find that
maturity mismatched investment impedes digital orientation for firms with more agent problems and maturity
mismatched investment could impede its digital orientation through weakening managerial attitude toward
potential risks.

1. Introduction
Digital orientation—that is, deliberate strategic positioning to take
advantage of the opportunities presented by digital technologies
(Kindermann et al., 2021; Quinton, Canhoto, Molinillo, Pera, & Bud­
hathoki, 2018; Schweiger, Stettler, Baldauf, & Zamudio, 2019). How­
ever, firms with a digital orientation may face novel challenges when
engaging in digitalization initiatives (Yoo, Boland Jr, Lyytinen, &
Majchrzak, 2012). The extent of a firm’s digital transition may entail
considerable effort and financial commitment (Kallinikos, Aaltonen, &
Marton, 2013; Kindermann et al., 2021; Nambisan, Wright, & Feldman,
2019). Therefore, we anticipate that a firm’s financing arrangements
may affect their digital orientation. Our study is based on the maturity-
matching hypothesis: the cost of financing assets can be found by
matching debt maturity to asset life (Morris, 1976). The cash flows
generated by the asset are expected to be sufficient to service and retire
the debt by the end of its life. A hedging policy in which debt maturity is
approximately equal to the asset life may help firms alleviate the un­
derlying risks of a maturity mismatch (Barclay & Smith Jr, 1995; Stohs &
Mauer, 1996).
The extant literature has distinguished the motivation behind firms’
maturity mismatched behavior using the following perspectives: active
and passive mismatch views (Chen, Li, Wang, & Zhang, 2019; Wang,
Wang, & Chen, 2021). The active mismatch perspective mandates that
because of its lower borrowing costs and higher liquidity, issuing
short-term debt is an optimal action for a firm with few financial con­
straints and highly asymmetric information (Diamond, 1991; Flannery,
1986; Myers & Majluf, 1984). Thus, maturity mismatched behavior can
be considered a positive implication: that firms have strong earning
ability and prefer unpredictable strategy orientations. The passive
mismatch view explains that imbalances in financial development and
prominent structural contradictions of credit are widespread, which
force firms to experience a mismatch in the maturity of assets and lia­
bilities (Graham & Harvey, 2001). Owing to career concerns and the
potential risk of a maturity mismatch, managers may exert efforts to
pursue low short-term profits (Dewatripont & Tirole, 1994; Jensen,
1986; Myers, 1977). It is apparent that the choice of a financing
arrangement is crucial to a firm’s strategic orientation. Hence, we
develop two competing hypotheses about maturity mismatched invest­
ment and digital orientation, which has hitherto been unexplored.
A maturity mismatch behavior is risky for sustainability, but this
realistic dilemma can be alleviated by digital financial inclusion (DFI).
Kim, Yu, and Hassan (2018) and Chatterjee (2020) suggested that DFI
has a significant impact on the liquid risk and sustainable growth of
firms. DFI signifies efforts made to provide digital access to financial
services, particularly to financially unserved groups (Chakravarty & Pal,

* Corresponding author.
E-mail addresses: xumeng@hrbeu.edu.cn (M. Xu), yangzhh@hrbeu.edu.cn (Z. Yang), sas@jlu.edu.cn (Y.-E. Lin), ligb@bjou.edu.cn (G. Li).

https://doi.org/10.1016/j.irfa.2023.102957
Received 16 May 2023; Received in revised form 5 September 2023; Accepted 20 September 2023
Available online 24 September 2023
1057-5219/© 2023 Elsevier Inc. All rights reserved.
M. Xu et al.
2013). DFI offers businesses digital methods of generating capital,
saving money, and investing. The development of DFI has enabled
various types of financial institutions to obtain more information and
improved the availability of financial resources and the financing effi­
ciency of firms (Yang & Zhang, 2020). We believe that DFI can help
firms alleviate the potential pressure of financing arrangements and the
realistic dilemma of “difficult financing and expensive financing.”
Hence, this study examines the effect of DFI on the relationship between
maturity mismatched investments and digital orientation.
Several reasons for using the Chinese data in our study. First, the
Shanghai Stock Exchange and Shenzhen Stock Exchange remain
incomparable to other channels of financing (Allen, Qian, & Qian,
2005). The constraints of financial regulation, weak investor protection,
and low information transparency in China lead banks to control default
risk through short-term debts (Fan, Titman, & Twite, 2012). Hence,
Chinese firms experience a greater maturity mismatch problem (Luo,
Fang, Liu, & Zhao, 2019). Second, existing studies on digital orientation
have focused on developed countries (Quinton et al., 2018; Schweiger
et al., 2019). To maintain a competitive advantage in the digital era,
firms in developing countries are focusing on digital transformation. We
consider China an emerging market where the potential influence of
investment behavior on digital orientation is ambiguous. Third, China’s
rapid expansion of DFI over the last few years has dramatically
augmented the accessibility and affordability of financial services
(Ahmad, Majeed, Khan, Sohaib, & Shehzad, 2021; Yang & Zhang, 2020).
Despite that fact that DFI has been shown to foster growth, corre­
sponding empirical evidence from China remains scant. Therefore, this
issue must be examined in the largest developing country in the world.
We believe that Chinese firms provide an ideal setting to test our
hypotheses.
Analysis of a large dataset of Chinese A-shared listed firms for the
period 2011–2020 confirmed that our findings are consistent with the
passive mismatch view. We found that firms’ maturity mismatched in­
vestments can impede their digital orientation and that DFI further
weakens the negative relationship between maturity mismatched in­
vestment and digital orientation. We further examine the negative
relationship between maturity mismatched investments and digital
orientation under the agency hypothesis: maturity mismatched in­
vestments can lead to digital orientation for firms with more agent
problems. Then, we used a perspective on risk-bearing behavior to
analyze the underlying economic mechanisms based on our main find­
ings. We found that firms’ maturity mismatched investments can impede
their digital orientation by weakening managerial attitudes toward po­
tential risks (e.g., operating risk, bankruptcy risk, and stock price crash
risk).
Our findings contribute to existing literature in several ways. First, it
is related to the emerging literature on digital orientation. Most studies
on digital orientation have focused on concepts (Quinton et al., 2018;
Schweiger et al., 2019), measurements (Kindermann et al., 2021), and
potential economic consequences (Kindermann et al., 2021). Studies has
largely ignored the influence of the ingredients of digital orientation
from a behavioral finance perspective. Our study examines the pre­
dictability of firms’ maturity mismatched behavior in the context of
digital orientation and enriches the emerging literature on digital
orientation.
Second, this study extends the research on maturity mismatched
investments in that it is the first to investigate whether maturity mis­
matched investments enhance or impede a firm’s digital orientation. In
contrast to related emerging studies, this study focuses on the de­
terminants of maturity mismatched (Converse, 2018; Bai & Qiu, 2021;
Wang, Wang, & Chen, 2021; Tang, Ho, Wu, Zou, & Yao, 2022). Our
study demonstrates that maturity mismatched investments can influ­
ence managerial risk-bearing behavior and, making managers hesitant
to adopt a digital orientation. Further, the results of the heterogeneity
test identify the boundary conditions under which maturity mismatched
behavior impedes digital orientation; this finding expands the
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International Review of Financial Analysis 91 (2024) 102957
theoretical boundary of agent theory.
Third, our study enriches the understanding of the role of DFI at the
micro-level. Scholars have explored the relationship between DFI and
economic growth in emerging markets and suggested that DFI has a
positive effect on economic growth (Ahmad et al., 2021; Chatterjee,
2020; Kim et al., 2018). Unlike previous studies, we constructed a hi­
erarchical linear model and found that the development of DFI can
enhance firms’ willingness to pursue a digital orientation. We hope that
this new evidence may help shed some light on the DFI literature.
The remainder of this paper is organized as follows: Section 2 dis­
cusses related literature and presents the hypotheses. Section 3 outlines
our sample selection, variables, construction, and preliminary analysis.
Section 4 presents the empirical analysis and endogeneity tests. Section
5 presents a further analysis underpinning our main findings, and Sec­
tion 6 concludes the study.
2. Literature review and hypotheses development
2.1. Maturity mismatched investment and digital orientation
The existing literature has distinguished the motivation for firms’
mature-mismatched behavior using the active and passive mismatch
views (Chen et al., 2019; Wang, Wang, & Chen, 2021). On the supply
side, severe financial friction, and limited financing channels force firms
to adopt maturity mismatches when they are unable to access long-term
funds. Thus, firms may obtain relatively short-term bank loans in the
current bank-dominated financial system and are forced to choose
maturity mismatches. Due to the lack of long-term financing in­
struments, firms may compromise with a “passive mismatch view” (Fan
et al., 2012). On the demand side, however, the preferential tax policy
regarding government bonds increases the pricing of long-term corpo­
rate bonds (Greenwood, Hanson, & Stein, 2010). Thus, firms may
actively adopt maturity mismatches to reduce debt costs. In other words,
they agree with “active mismatch view,” which constantly advocates for
short-term debts to support long-term investments. Apparently, an
active maturity mismatch cannot trigger a liquidity crisis. Only if the
firm able to roll over its maturing short-term debts, which mainly de­
pends on the firm’s financing arrangements.
Due to the characteristics of digital transformation, a firm’s transi­
tion to digital technology may entail considerable effort and financial
commitment (Kallinikos et al., 2013; Kindermann et al., 2021; Nambisan
et al., 2019). We anticipate that firms’ maturity mismatched behavior
may affect their digital orientation. Consequently, we used the above­
mentioned views on maturity mismatch to develop two competing hy­
potheses. According to the “active mismatch view,” given a firm’s
private information, short-term debt reduces borrowing costs when the
firm receives good news and debt is refinanced (Stohs & Mauer, 1996).
Short-term debt may expose a firm to liquidity risk, but the risk can be
outweighed by the expected benefits of short-term debt refinancing.
Flannery (1986) argued that a firm’s choice of debt maturity structure
can signal internal information about the firm’s quality when they are
systematically better informed than outside inventors. Diamond (1991)
argued that firms with favorable private information about future
profitability prefer to issue short-term debts.
Therefore, following the “active mismatch view,” the maturity
mismatch behavior can be considered a positive signal. Firms with
positive internal information about their value, which is subject to in­
formation asymmetry (Barclay & Smith Jr, 1995). As discussed earlier,
digital transformation is the exploitation of digital opportunities that
could help create and appropriate more value for a firm (Matarazzo,
Penco, Profumo, & Quaglia, 2021; Verhoef et al., 2021). However, the
digital transformation process is highly unpredictable. Giotopoulos,
Kontolaimou, Korra, and Tsakanikas (2017) found that firms may face
increased difficulties in adopting new technologies due to a lack of
necessary resources, skills, commitment, and proper understanding of
digital transformation. Overcoming these difficulties may require firms
M. Xu et al.
to possess various capabilities and financial commitments. Thus, we
suggest that maturity mismatched behavior is an active choice of a firm
that has a strong ability to generate future earnings and is able to pursue
digital orientation. Based on the above discussion, we propose the
following hypothesis:
H1a. Firms with higher maturity mismatched investments will
demonstrate higher digital orientation.
According to the “passive mismatch view,” the fragile financial
structure of financial intermediaries may cause funding liquidity prob­
lems and lead the debt maturity decision of firms to costs and risks
(Covitz, Liang, & Suarez, 2013; Gorton & Metrick, 2012; He & Xiong,
2012). Firms may be forced to choose maturity mismatches due to their
current bank-dominated financial systems. On the one hand, the liter­
ature argues that maturity matching can minimize the agency costs of
debt financing (Chang, 1989; Myers, 1977). Firms can use maturity
mismatch to control agency conflicts by ensuring that debt repayments
are scheduled to correspond with a decline in the value of the assets in
place. On the other hand, under the pressure of maturity mismatch,
firms exhaust their capacity to raise funds for investments and continue
to adopt maturity mismatches, regardless of the high rollover risk
(Diamond, 1991). Consequently, passive maturity mismatch behavior
can aggravate agency conflicts and enhance potential risks for firms.
However, because of these inevitable uncertainties, managerial
strategies can be influenced by risk preferences (Hoskisson, Chirico,
Zyung, & Gambeta, 2017). Due to career concerns, managerial agents
may be more averse to risk-taking. Even if managers bear the potential
risks of a maturity mismatch, the motivation for self-protection may lead
them to take fewer risks (Hoskisson, Castleton, & Withers, 2009).
Consequently, managers may seek a more conservative corporate stra­
tegic orientation than a digital orientation. This finding is similar to that
of Jensen and Meckling (1976), who suggested that a suboptimal in­
vestment policy is an agency cost induced by risky debt. Thus, we sug­
gest that if maturity mismatch behavior is a firm’s passive choice, career
concerns caused by agency conflicts and the potential risk of maturity
mismatching may make managers hesitant to adopt a digital orientation.
Based on the above discussion, we propose the following hypothesis:
H1b. Firms with higher maturity mismatched investments will
demonstrate lower digital orientation.
2.2. The moderating effect of DFI
Under the “active mismatch view,” firms with high information
asymmetry may find it difficult to signal private information; thus, they
tend to raise short-term debts for long-term investments as a positive
signal. However, if the “passive mismatch view” dominates, firms under
severe financial constraints tend to exhaust their capacity to raise in­
vestments. Information asymmetry and potential transaction costs can
lead firms to make maturity mismatched investments. This dilemma
may be alleviated by DFI, which signifies efforts to provide digital access
to financial services (Zhang, Zhang, Wan, & Luo, 2020). It offers digital
methods of capital formation, savings, and investment opportunities for
businesses (Ozili, 2018). In other words, the development of DFI can
overcome the dependence of traditional financing on physical outlets.
DFI has greater geographical penetration, which improves the avail­
ability of credit funds and financial service coverage for firms (Ahmad
et al., 2021).
On one hand, the development of DFI can alleviate information
asymmetry between banks and firms. This type of information asym­
metry and high transaction costs may make traditional financial in­
stitutions reluctant to grant loans to firms (Sarma & Pais, 2011). As big
and substitute data rapidly grow in popularity, DFI can collect business
information, systematic behaviors, industry features, external data, and
the personal characteristics of firms. This information can be used to
score credit, thereby providing appropriate credit lines to firms. By
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International Review of Financial Analysis 91 (2024) 102957
contrast, DFI can enhance the accessibility of financial services and
alleviate transaction costs. Given the fragile structure of financial in­
termediaries, they are liable to cause funding liquidity issues, posi­
tioning financial pressure on firms. DFI advocates providing appropriate
and effective financial services to firms at an affordable cost and
expanding the available financing channels. DFI delivers financial sup­
port to achieve sustainable firm growth by mitigating financing con­
straints (Yang & Zhang, 2020).
In this context, we anticipate that the development of DFI may
alleviate firms’ financial constraints and enhance their willingness to
pursue digital orientation. Under the active maturity mismatch hy­
pothesis, DFI may impede firms’ signaling preferences, such as using
maturity mismatch. With sufficient financial support, firms can pursue
their digital orientation better. According to the passive maturity
mismatch hypothesis, DFI may mitigate agency conflicts and enable
firms with financial resource support, which may catalyze firms to adopt
a digital orientation. Based on the above discussion, we propose the
following hypotheses:
H2. The DFI will positively moderate the relationship between firms’
maturity mismatched investments and digital orientation.
3. Data and methodologies
3.1. Sample selection
The financial information for our sample was drawn from the China
Stock Market and Accounting Research Database (CSMAR). The DFI
data were obtained from the “Peking University Digital Financial In­
clusion Index of China” (PKU-DFIIC).1 To construct our sample, we
considered Chinese A-shared-listed firms with non-missing financial
information for the period 2011–2020. We then retained observations
with sufficient data to determine our dependent (digital orientation) and
control variables. Following prior research, we excluded observations
with a leverage ratio greater than one, those missing financial infor­
mation, and financial firms because they have different investment be­
haviors due to regulations. Subsequently, we matched our DFI data with
other data from the CSMAR database. The sample selection process
resulted in 14,823 firm-year observations that were used in the baseline
regressions. To minimize the effect of outliers, we winsorized all
continuous variables at the 1% and 99% levels.
3.2. Variables definition
3.2.1. Dependent variable: digital orientation
To the best of our knowledge, extant empirical work on digitalization
has primarily relied on case studies, single-point-in-time surveys, key
informant inquiries, and historical data on IT investments; however,
there is a lack of generalizable and longitudinal investigations (Kind­
ermann et al., 2021; Vial, 2021). A concept that delineates a digitally
enabled strategic orientation can aid researchers to better understand
the characteristics that lead to competitive advantage across firms (Yoo
et al., 2012). To capture the characteristics of digital orientation, we
followed Kindermann et al. (2021) and used computer-aided text anal­
ysis to construct a text feature index.
Specifically, we operationalized digital orientation using a
computer-aided text analysis dictionary, which allowed us to conduct
large-scale and longitudinal studies. Computer-aided text analysis is an
established approach to research other strategic orientations, allowing
the empirical examination of research questions using standardized text
1
Peking University Digital Financial Inclusion Index of China (PKU-DFIIC)
website: https://idf.pku.edu.cn/. The project has been completed twice: Phase I
(2011–2015) and Phase II (2016–2020). Therefore, our sample in this study
starts from 2011.
M. Xu et al.
reports from firms (Barr, 1998; Short, Broberg, Cogliser, & Brigham,
2010). Drawing on a sample of annual reports disclosed in the Man­
agement Discussion and Analysis (MD&A)2 between 2011 and 2020, we
analyzed the characteristics of the corpus, collected the initial word set
of digitalization, and then segmented words. By using the natural lan­
guage processing (NLP) method of the word-embedding neural network
language model combined with the TF-IDF, we calculated the text-
similarity index to expand the word set. Finally, we used the dictio­
nary method to calculate the text feature index (Digital).
The construction process for digital orientation (Digital) was as fol­
lows: First, unlike Kindermann et al. (2021), who used four dimensions
to construct the measure, we determined the initial word set from using
dimensions: digital technology scope and digital architecture configu­
ration. Digital technology scope refers to firm-specific sets of technolo­
gies (i.e., “Artificial Intelligence,” “Cloud Technology,” “Big Data,” and
“blockchain) that determine the scope or extent to which the firm may
create digitally enabled value for its customers. Digital architecture
configuration captures the idea of generativity (i.e., “industrial Internet
platforms,” “B2B,” “B2C,” and “artificial marketing”)—the capacity of
digital technology to trigger unguided change mechanisms through
many dispersed and uncoordinated units.
Second, we expanded similar words, represented in the final word set
as “Digital Orientation” words. We cleaned the segmentation corpus and
used the TF-IDF method to calculate the importance of the basic seed
word set in the corpus to obtain the TF-IDF value.3 Then, we trained
these word vectors using a word-embedding neural network language
model.4 By weighting these word vectors, we obtained the text vector
and used the cosine function to measure the text similarity. The cosine
value between the angles of the two text vectors in the vector space was
used to measure the difference between the two individuals. If the cosine
value is close to one, and the angle tends to zero, then the two vectors are
very similar. The cosine value was close to zero, and the angle tended to
be 90◦ , indicating that the two vectors were not quite similar. The larger
the text-similarity value, the higher is the similarity between texts.
Finally, we used the dictionary method to calculate a firm’s digital
orientation. We used the ratio derived from the total word frequency of
“Digital Orientation” vocabulary divided by the total word frequency of
MD&A to identify the digital orientation text feature index (Digital). The
larger the index value, the stronger the firm’s digital orientation.
3.2.2. Independent variable: maturity mismatched investment
Referring to previous research, maturity mismatched investment
2
Different from Kindermann et al. (2021), we used MD&A instead of
shareholder letters as the corpus for text analysis based on the following con­
siderations. Firstly, unlike the full text of annual reports, the MD&A of annual
reports is mainly character-based text information. Thus, it is more conducive
for us to adopt this corpus because text analysis collects relative information
contained in the text. Secondly, Merkl-Davies and Brennan (2007) argued that
managers have discretion in writing annual reports and there is no financial
incentive to guide them to report opportunistic events. Therefore, managers
may objectively use written discretion to convey information about the oper­
ating conditions and future strategy. As a long-term strategy, digitalization has
gradually become the preferred strategy for firms to improve their competitive
advantages, and it may become the key content of the MD&A disclosure in the
annual report. Thus, we believed that using the MD&A as the corpus for con­
structing the digital transformation level text feature index would be valid.
3
To the best of our knowledge, the word embedding model is a neural
network language model that presents words as multi-dimensional vectors ac­
cording to the semantic information of context. The word vector obtained by
embedding model training can not only capture the semantic information of
text but also consider the influence of a single word or words in the whole text.
4
In our study, the word-embedding model and TF-IDF method were used to
expand similar words in the initial word set based on the following two con­
siderations: different individuals may have different names for the same
concept and the use of NLP technology may alleviate the subjective selection
bias in the process of word set expansion.
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International Review of Financial Analysis 91 (2024) 102957
Table 1
Variable definitions.
Variable Definition
Digital Firm i’s degree of digital orientation, calculated by using the NLP
method construct text feature index of firms’ digital transformation
over the fiscal year t, details in the Section 3.2.1
MMI Firm i’s degree of maturity mismatched investment, calculated as
ratio of the maturity mismatched investment by total assets of the last
period, details in the Section 3.2.2
DFI Province j’s total digital financial inclusion index, details in the
Section 3.2.3
Breadth Province j’s coverage of digital financial inclusion, details in the
Section 3.2.3
Depth Province j’s usage of digital financial inclusion, details in the Section
3.2.3
Digitization Province j’s digitalization level of digital financial inclusion, details
in the Section 3.2.3
Size Firm i’s size, defined as the natural logarithm of firm i’s total asset,
measured at the end of fiscal year t
Roa Firm i’s return on asset ratio, measured at the end of fiscal year t
Lev Firm i’s book leverage, measured at the end of fiscal year t
Turnover Firm i’s inventory turnover, measured at the end of fiscal year t
SOE A dummy variable that equals one if a firm is ultimately controlled by
the state and zero otherwise
Dual A dummy variable that equals one if firm i’s CEO also holds the
position of the chair of the board and zero otherwise
Top1 Firm i’s ownership concentration, defined as the ratio of shares held
by the largest shareholder over the fiscal year t
Board Firm i’s board of directors, defined as the natural logarithm of firm i’s
total number of boards over the fiscal year t
Sharebalance Firm i’s share balance, defined as the ratio of shares held the second -
the fifth shareholder divided by the largest shareholder over the fiscal
year t
Independent Firm i’s independent directors, defined as the natural logarithm of
firm i’s total number of independent directors over the fiscal year t
This table gives variable definitions. Variables are computed for each firm and
each year. Industry is defined by using CSRC-defined industry sector.
(MMI) is defined as follows:
Maturity mismatched investment = Cash outflow from the con­
struction of fixed assets and other investment activities - Increase in
long-term loans in the current period - Increase in equity in the current
period - Net cash flow from operating activities - Cash inflow from
disposal of fixed assets and other cash inflows.
The increase of long-term loan in the current period is calculated by:
Increase of long-term loan in the current period = Long-term loan in
the current period - Long-term loan in the last period + non-current li­
abilities due within one year.
Finally, we used the total assets of the last period to eliminate the
scale effect.
3.2.3. Moderating variables: DFI
To the best of our knowledge, extant studies have used only a few
dimensions to measure the degree of digital financial inclusion, such as
the number of commercial bank branches per 100,000 adults, the
number of ATMs per 1000 km, and the measure of credit and deposits as
a percentage of the gross domestic product (GDP) (Chakravarty & Pal,
2013; Lenka & Bairwa, 2016). However, DFI is a multidimensional
concept that includes various factors affecting the accessibility and us­
ability of financial products/services, and the abovementioned financial
indicators cannot provide a suitable measurement of digital financial
inclusion. Thus, we followed Yang and Zhang et al. (2020) and Ahmad
et al. (2021) by utilizing the comprehensive DFI index computed by
Peking University instead of one or two traditional financial inclusion
proxies.
The DFI index from the PKU-DFIIC comprises three geographical
levels, namely, provincial, municipal, and county-level data, of which
we used the first. Apart from the cumulative index of the DFI, we also
used disaggregated indices such as the breadth of coverage (Breadth),
depth of usage (Depth), and digitization level (Digitization). Breadth of
M. Xu et al. International Review of Financial Analysis 91 (2024) 102957

Table 2
Descriptive statistics.
Panel A

Variable N Mean Sd Min P50 Max

Digital 14,823 0.824 1.040 0 1.010 4.357

MMIt-1 14,823 − 0.077 0.147 − 0.616 − 0.066 0.368
Size 14,823 22.12 1.309 19.400 21.940 26.090
Roa 14,823 0.039 0.066 − 0.293 0.039 0.211
Lev 14,823 0.421 0.212 0.049 0.409 0.970
Turnover 14,823 0.051 0.119 0.002 0.019 0.926
SOE 14,823 0.377 0.485 0 0 1
Dual 14,823 0.289 0.453 0 0 1
Top1 14,823 0.349 0.147 0.093 0.329 0.749
Board 14,823 2.126 0.198 1.609 2.197 2.708
Independent 14,823 0.376 0.053 0.333 0.364 0.571
Sharebalance 14,823 0.748 0.618 0.026 0.584 2.829

Panel B
Variable N Mean Sd Min P50 Max
DFI 3162 1.787 0.633 0.533 1.879 3.345
Breadth 3162 1.680 0.641 0.595 1.729 3.265
Depth 3162 1.742 0.665 0.245 1.821 3.497
Digitization 3162 2.221 0.773 0.139 2.507 4.025

Panel C
MMI_dum = 0 MMI_dum = 1 Mean-Diff t
Variable Observation Mean Observation Mean
Digital 10,738 0.908 4085 0.826 0.082*** 5.07
MMIt-1 10,738 − 0.144 4085 0.054 − 0.198*** − 1.30
Size 10,738 22.256 4085 21.724 0.533*** 29.97
Roa 10,738 0.058 4085 0.011 0.047*** 57.47
Lev 10,738 0.389 4085 0.383 0.006** 2.11
Turnover 10,738 0.053 4085 0.055 − 0.001 − 0.61
SOE 10,738 0.339 4085 0.290 0.048*** 6.85
Dual 10,738 0.274 4085 0.318 − 0.044*** − 6.47
Top1 10,738 0.350 4085 0.336 0.014*** 6.39
Board 10,738 2.122 4085 2.103 0.019*** 6.60
Independent 10,738 0.376 4085 0.376 − 0.000 − 0.12
Sharebalance 10,738 0.726 4085 0.725 0.001 0.14

Panel A of this table reports summary statistics of the variables. The variables are defined in Section 3.2 and Table 1. Panel B of this table reports summary statistics of
the moderating variables. The variables are defined in Section 3.2.3. Panel C of this table reports the result of mean-difference test with the main variables and control
variables. We divide the firms into two groups sorted by the dummy variable (MMI_dum), which equals one if firms’ maturity mismatched investment degree is positive
and zero otherwise. Our sample firms are from the CSMAR database with non-missing financial information for the period 2011 to 2020 with financial firms excluded.
*** (**) (*) indicates significance at the 1% (5%) (10%) two-tailed level, respectively.

coverage evaluates the coverage of digital finance based on the number
of electronic accounts (i.e., Internet payment accounts and bank ac­
counts bound to mobile banking). The depth of usage evaluates the
actual usage of Internet financial services, which are categorized into
credit, payment, monetary funds, credit investigation, insurance, and
investment services. The main aspect governing digital financial services
is the level of digitalization (Digitization).
3.2.4. Control variables
Motivated by prior research, we included several control variables to
isolate the effect of maturity mismatched investments on digital orien­
tation under the moderation of DFI. These control variables improved
comparability with prior studies and reduced the possibility of omitting
variables. The control variables are as follows: the firm size (Size), firm
performance (Roa), financial leverage (Lev), inventory turnover (Turn­
over), state-owned enterprise (SOE), CEO-chairman duality (Dual),
ownership concentration (Top1), board size (Board), independent di­
rector size (Independent), share balance (Sharebalance), and two group
dummy variables (Year and Firm) to address potential year and firm
fixed-effects. Detailed definitions of these variables are presented in
Table 1.
3.3. Model specification
investments influence their digital orientation:
Digitali,t = β0 + β1 MMI i,t− 1 + β2 Sizei,t + β3 Roai,t + β4 Levi,t + β5 Turnoveri,t
+β6 SOEi,t + β7 Duali,t + β8 Top1i,t + β9 Boardi,t + β10 Sharebalancei,t
∑ ∑
+β11 Independenti,t + Year + Firm + εi,t
(1)
where i indexes the firm and t indexes the year. We used a one-year
lagged independent variable in the regression model to alleviate the
influence of endogeneity. Since we developed two competing hypothe­
ses for maturity mismatched investment and digital orientation, signif­
icantly positive β1 would support H1a as well as the active mismatch
view. On the contrary, significantly negative β1 would support H1b as
well as the passive mismatch view. Following prior studies, we tested the
coefficients of the model using t-statistics based on clustered standard
errors at the firm level, which were robust to heteroscedasticity and
within-firm serial correlations.
After testing the effects of maturity mismatched investments on
digital orientation, we extended the previous analysis to examine
whether DFI has a moderating effect on the relationship between
maturity mismatched investment and digital orientation by utilizing the
interaction terms of MMI and Digital. The moderating effect of DFI on
digital orientation was tested using the model below:

We used the following model to test how firms’ maturity mismatched

5
M. Xu et al. International Review of Financial Analysis 91 (2024) 102957

Digitali,t = β0 + β1 MMI i,t− 1 + β2 MMI i,t− 1 × Xi,t + β3 Sizei,t + β4 Roai,t + β5 Levi,t

This table reports the Pearson correlation coefficients of the variables. The variables are defined in Section 3.2 and Table 1. Our sample firms are from the CSMAR database with non-missing financial information for the
Sharebalance
+β6 Turnoveri,t + β7 SOEi,t + β8 Duali,t + β9 Top1i,t + β10 Boardi,t
∑ ∑
+β11 Sharebalancei,t + β12 Independenti,t + Year + Firm + εi,t
(2)

1
Independent

where i indexes the firm and t indexes the year; Xi,t includes four

− 0.026***
different measures of DFI (i.e., DFI, Breadth, Depth, and Digitization), as
described in Section 3.2; and the interaction term MMI×X represents the

1
moderating effect. In order to alleviate the influence of endogeneity, we

− 0.546***
used a one-year lagged independent variable in the regression model to
alleviate the influence of endogeneity. In this model, β1 indicates the
Board

0.004
effect of maturity mismatched investments on digital transformation

1
and β3 shows the moderating effect of DFI on digital transformation. We

− 0.681***
0.031***
0.044***
expected β3 to be significantly positive, which would suggest that DFI
may improve the availability of financial resources and financing effi­
Top1

ciency of the firms, alleviating the effect of maturity mismatched in­

1

vestment on digital orientation.

− 0.050***
− 0.182***
0.115***
0.063***
Dual

3.4. Descriptive statistics

1
− 0.302***

− 0.061***
− 0.257***
0.221***
0.282***

Panel A of Table 2 presents the descriptive statistics of the variables

used in the analysis. Digital orientation has a mean of 0.824 and a me­
SOE

dian of 1.010, which suggests that the sample firms’ digital orientation is
negatively skewed and less positive than negative. On average, the
period 2011 to 2020 with financial firms excluded. *** (**) (*) indicates significance at the 1% (5%) (10%) two-tailed level, respectively.
− 0.060***

− 0.049***
0.102***

0.031***
0.058***
Turnover

sample firms have a mean value of − 0.077 and a median value of

− 0.008

− 0.066, suggesting that most firms have normal investment arrange­

1

ments. Panel B of Table 2 presents the descriptive statistics of the four

− 0.151***

− 0.135***

moderating variables. The median value of the four moderating vari­

0.285***
0.290***

0.063***
0.145***
− 0.005

ables (DFI, Breadth, Depth, and Digitization) is greater than their mean
Lev

value. These results indicate that the sample provinces’ digital financial
1

inclusion is negatively skewed. In other words, the digital financing of

− 0.380***
− 0.082***
− 0.080***

− 0.019***

some sample provinces did not show balanced development.

0.059***
0.131***

0.012**
0.004

In our study, we examined the relationship between maturity mis­

Roa

matched investments and digital orientation using the distribution of

1

mismatched firms. We divided the firms into two groups sorted by the
− 0.036***

− 0.200***

− 0.120***
0.490***
0.167***
0.360***

0.213***
0.264***

dummy variable (MMI_dum), which equaled one if the firms’ maturity

0.002

mismatched investment degree was positive, and zero otherwise. Panel

Size

C of Table 2 presents the results of the mean difference test with the
main and control variables. We observed a few interesting patterns in
− 0.021***
− 0.057***
− 0.029***
− 0.095***

− 0.058***
− 0.099***
Digitization

0.153***

0.060***

0.043***
0.107***

Panel C. The mean Digital of MMI firms (MMI_dum = 1) is lower than that
of non-MMI firms (MMI_dum = 0), and the mean difference of Digital is
1

significant at the 1% level. In addition, the mean differences of most of

− 0.086***
− 0.035***
− 0.143***

− 0.054***
− 0.118***

the control variables are significant at the 1% or 5% level. This suggests

0.919***
0.129***
0.022***

0.088***

0.042***
0.120***

that there is a significant difference between the digital orientation of

Depth

MMI and non-MMI firms, implying that it is necessary to examine the

1

relationship between maturity mismatched investments and digital

− 0.075***
− 0.036***
− 0.127***

− 0.056***
− 0.114***

orientation.
0.949***
0.949***
0.146***

0.076***

0.043***
0.115***
Breadth

Before conducting the empirical tests, we investigated whether

multicollinearity is an issue in our variable. Table 3 presents the Pearson
1

correlation coefficients between the dependent, independent, and con­

− 0.076***
− 0.035***
− 0.128***

− 0.057***
− 0.114***
0.991***
0.977***
0.967***
0.144***

0.078***

0.043***
0.117***

trol variables. As expected, we found that MMI was significantly and

0.003

negatively correlated, which means that H1b was initially supported.

DFI
Pearson correlation coefficient of variables.

Meanwhile, most of the correlation coefficients between the variables

were within a reasonable range of values, indicating that our regression
− 0.051***
− 0.055***
− 0.043***
− 0.050***
− 0.138***
− 0.521***

− 0.048***
− 0.032***

− 0.028***
− 0.013**
0.117***
0.034***

0.013**

0.013**

tests did not suffer from multicollinearity.

MMIt-1

4. Empirical results
− 0.039***

− 0.061***

− 0.141***

− 0.086***
− 0.052***
− 0.014**
0.240***
0.246***
0.234***
0.213***
0.041***

0.076***

0.041***
0.089***
0.015**
Digital

4.1. Investment short-term loans sensitivities test

Before we examined our research question, we answered another

Sharebalance

question as to whether the samples from our study exhibit the maturity
Independent
Digitization

mismatched investment behavior. Therefore, we followed Fazzari,

Turnover
Breadth
Table 3

MMIt-1

Board
Depth

Hubbard, and Petersen (1988) and McLean and Zhao (2014) and con­
Top1
Dual
SOE
Roa
Size
DFI

Lev

structed an investment- short-term loan sensitivity model as follows:

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M. Xu et al. International Review of Financial Analysis 91 (2024) 102957

Table 4 Table 5
Investment- short-term debts sensitivity test. The effect of maturity mismatched investment on digital orientation.
(1) (2) (1) (2) (3) (4)

CFICR Variables Digital Digital Digital Digital

Low_liquidityneed High_liquidityneed MMIt-1 − 0.119** − 0.176** − 0.388*** − 0.141**

(− 2.16) (− 2.50) (− 6.26) (− 2.26)
Variables Investment Investment Investment
Size 0.093*** 0.166*** 0.124***
Cashflow 0.156*** 0.134*** 0.226*** (5.76) (12.41) (8.85)
(16.89) (9.47) (16.80) Roa − 0.525** − 0.839*** − 0.252
Shortdebt 0.149*** 0.159*** 0.140*** (− 2.13) (− 4.03) (− 1.18)
(15.58) (11.51) (10.87) Lev − 0.320*** − 0.240*** − 0.149
Longdebt 0.196*** 0.207*** 0.199*** (− 3.17) (− 2.60) (− 1.62)
(13.37) (10.30) (9.92) Turnover 0.027 − 0.094 − 0.031
TobinQ 0.000* 0.000 0.001 (0.30) (− 1.22) (− 0.41)
(1.66) (1.04) (1.57) SOE − 0.226*** − 0.270*** − 0.243***
Size − 0.000 0.000 − 0.001 (− 5.92) (− 8.13) (− 7.33)
(− 0.46) (0.15) (− 0.99) Dual 0.114*** 0.097*** 0.084***
Leverage − 0.028*** − 0.031*** − 0.030*** (3.35) (3.40) (2.98)
(− 7.84) (− 6.36) (− 6.89) Top1 − 0.432*** − 0.310** − 0.198
Constant 0.080*** 0.074*** 0.092*** (− 2.86) (− 2.49) (− 1.59)
(5.88) (4.09) (5.44) Board 0.107 − 0.059 0.090
Observations 14,151 7517 6634 (1.10) (− 0.69) (1.06)
Empirical p value – 0.160 Independent 0.745** 0.368 0.551*
Adjusted R2 0.137 0.118 0.156 (2.08) (1.17) (1.78)
Year F.E. YES YES YES Sharebalance 0.004 − 0.025 − 0.020
Industry F.E. YES YES YES (0.09) (− 0.78) (− 0.65)
Constant 0.341*** − 1.761*** − 2.776*** − 2.662***
In this table, we construct an investment-cash flow model to examine whether (21.76) (− 4.44) (− 7.85) (− 7.55)
samples’ investment behavior from our study dependent on short-term debts Observations 14,823 14,823 14,823 14,823
(Fazzari et al., 1988; McLean & Zhao, 2014). Column (1) reports the regression Adjusted R2 0.064 0.080 0.228 0.263
results of investment– short-term debts model. Columns (2) and (3), present the Year F.E. YES YES NO YES
regression results of different liquidity need by using cash flow-based interest Firm F.E. YES NO YES YES
coverage ratio (CFICR) as the group variable. The variables are defined in Sec­ In this table, we examine the impact of maturity mismatched investment on
tion 4.1 and Table 1. Our sample firms are from the CSMAR database with non- digital orientation. Column (1) reports the baseline results includes only inde­
missing financial information for the period 2011 to 2020 with financial firms pendent variable, year fixed effect, and firm fixed effect. Columns (2) reports the
excluded. *** (**) (*) indicates significance at the 1% (5%) (10%) two-tailed baseline results with control variables and year fixed effect. Column (3) reports
level, respectively. the baseline results with control variables and firm fixed effect. Column (4)
reports the baseline results with control variables and year-firm fixed effect. The
Investmenti,t = β0 +β1 Cashflowi,t +β2 Shortdebti,t +β3 Longdebti,t +β4 TobinQi,t definition of these variables has been discussed in the Section 3.2 and definitions
∑ ∑ of other variables are consistent to Table 1. Our sample firms are from the
+β5 Sizei,t +β6 Leveragei,t + Year + Industry+ εi,t
CSMAR database with non-missing financial information for the period 2011 to
(3) 2020 with financial firms excluded. *** (**) (*) indicates significance at the 1%
(5%) (10%) two-tailed level, respectively. The t-values in parentheses are
where i indexes the firm and t indexes the year. Investment is defined as adjusted by firm clustering. Year fixed effects Year F.E. and Firm fixed effects
the cash paid to acquire fixed assets, intangible assets, and other long- Firm F.E. are included in all regressions but the coefficients are not reported.
term assets; Cashflow is the net cash flow from operating activities;
Shortdebt is short-term loans; Longdebt is long-term loans payable; group. Column (2) presents the regression results for the different
TobinQ is market to book ratio; Size is the natural logarithm of a firm’s liquidity needs. The coefficient estimate of Shortdebt is significantly
total assets; Leverage is the total book value of debts to total book value positively associated with Investment in different groups of liquidity
of assets; Year indicates the year fixed-effects; Industry indicates the needs. Furthermore, the empirical p-value of the SUR regression, esti­
industry fixed-effects. We used the total assets of the last period to mated by bootstrapping (1000 seeds for random sampling), is 0.160 for
eliminate the scale effect. the different liquidity-need groups. Since the empirical p-value is over
Column (1) of Table 4 presents the results of investment-short term 0.1, the results did not show any significant difference among the two
debt sensitivity tests. As shown, the coefficient estimate of Shortdebt is groups of liquidity needs, supporting our hypothesis’s precondition.
significantly positive at the 1% level. This result further supports our
hypothesis’s precondition, to the extent that samples from our study
exhibit the maturity mismatched investment behavior. However, in­ 4.2. Baseline regression results
vestment behavior may also lead to firms’ liquidation requests. Because
a firm may purchase current assets using short-term loans, we suggested Table 5 reposts the tests on the relationship between maturity mis­
that maturity mismatched investment may not be the reason for a firm matched investment and firms’ digital orientation. We started with a
having higher investment – short-term loans sensitivities. parsimonious model that regresses digital orientation only on the
We further divided our sample into two groups with different maturity mismatched investment and added year fixed effects and firm
liquidity needs: the Low_liquidityneed and High_liquidityneed groups. We fixed effect to absorb any aggregate time fixed effect. Column (1) of
used the cash flow-based interest coverage ratio (CFICR) to measure Table 5 shows that the coefficient estimate is − 0.119, suggesting a
firms’ liquidity needs. Specifically, we defined CurrentAssetratio as a negative raw association between firms’ maturity mismatched invest­
dummy variable that equals one if firms’ cash flow-based interest ment and digital orientation. In column (2), we maintained the year
coverage ratio is over their median by industry and year, and zero fixed effect and found that the coefficient estimate of MMI is still
otherwise. If investment – short-term loans sensitivities reflect that in­ negative and statistically significant. Then, we removed the firm fixed
vestment leads to an increase in liquidity need rather than a maturity effect and reported in column 3. The coefficient estimate of MMI is
mismatch, the coefficient estimates of Shortdebt in Low_liquidityneed negatively significant, which still supports our prior regression results.
group may or may not be significantly lower than High_liquidityneed Finally, we gradually added year fixed effect and firm fixed effect and

7
M. Xu et al. International Review of Financial Analysis 91 (2024) 102957

found that the coefficient estimates of MMI remained negative and sig­ Table 6
nificant (column 4). These results support the passive mismatch view. Endogeneity checks by instrument variable method, Heckman two stage model,
Due to career concerns and the potential risks of maturity mismatched and omitted variable bias-corrected estimates.
investment, managers may avoid low short-term profits and hesitate to Panel A: Instrument variable regressions
adopt a digital orientation. Hence, H1b was supported. (1) (2) (3)

IV method IV method Heckman two stage

4.3. Endogeneity problems Variables Digital Digital Digital

MMIdiff − 0.272***
4.3.1. Instrumental variable regressions (− 3.86)
Our first identification strategy was to construct an instrument for MMIpolicy − 0.860***
maturity mismatched investments and use the two-stage least square (− 6.17)
MMIt-1 − 0.321***
method (2SLS) approach to correct for potential bias due to endoge­
(− 4.12)
neity. A valid instrumental variable should have no direct effect on the Size 0.135*** 0.168*** 0.161***
dependent variable but should be associated with the suspected (15.41) (18.20) (10.22)
endogenous variable. We suggest that the differences in the values of Roa − 0.597*** − 2.207*** − 0.333
maturity mismatched investment (MMIdiff) and the deleveraging policy (− 3.93) (− 7.50) (− 1.12)
Lev − 0.474*** − 0.136* − 0.235**
dummy (MMIpolicy) are suitable instruments for our study. This is (− 8.60) (− 1.79) (− 2.11)
because the difference in maturity mismatched investments can influ­ Turnover − 0.006 − 0.001 − 0.074
ence the ratio of maturity mismatched investment (MMI). However, the (− 0.08) (− 0.01) (− 0.95)
difference in a firm’s choice to mismatch may not directly influence its SOE − 0.272*** − 0.292*** − 0.262***
(− 13.72) (− 14.20) (− 6.82)
digital orientation. In other words, a change in firms’ maturity mis­
Dual 0.146*** 0.153*** 0.099***
matched investment can influence the investment plans of firms but may (7.61) (7.97) (2.74)
not impact their strategic orientation. Following Anderson and Hsiao Top1 − 0.505*** − 0.822*** − 0.250*
(1981), Arellano and Bond (1991) used the difference in the value of the (− 6.31) (− 9.38) (− 1.71)
maturity mismatched investment from firm i in year t and year t-1 to Board − 0.010 − 0.226*** − 0.070
(− 0.18) (− 3.77) (− 0.70)
measure the instrument variable MMIdiff. Independent 0.601*** 0.361* 0.317
Meanwhile, we constructed another instrumental variable, the (3.18) (1.92) (0.85)
MMIpolicy. The deleveraging policy was first proposed at the Central Sharebalance 0.027 0.018 − 0.010
Economic Work Conference (in December 2015) as one of the five major (1.40) (0.97) (− 0.28)
IMR − 0.166**
tasks of “cut overcapacity, reduce excess inventory, deleverage, lower
(− 2.57)
costs, and strengthen areas of weakness.” By advancing supply side Constant − 1.841*** − 1.765*** − 2.395***
structural reforms, a deleveraging policy may reduce firms’ reliance on (− 8.32) (− 8.00) (− 5.85)
debt. Thus, we suggest that a deleveraging policy can alleviate the Observations 13,454 14,063 12,859
behavior of maturity mismatched investments. Inspired by Ling and Wu R2 0.034 – 0.191
Year F.E. YES YES YES
(2022) and Qiu & Cheng (2022), we used the difference-in-difference Firm F.E. YES YES YES
model (i.e., the interaction term of the time variable and treatment Under identification
variable) to construct the delivery policy dummy (MMIpolicy). We test:
constructed a time variable that equals one if the year is over 2015 and Kleibergen-Paap LM 7293.156*** 840.436***
statistic
zero otherwise. For the treatment variable, we constructed a dummy
Weak identification
variable that equals one if the firm faces financial constraints, and zero test:
otherwise.5 This is because the deleveraging policy can directly improve Cragg-Donald Wald F 15,000.000 884.128
the maturity mismatched behavior of firms with financial constraints. statistic
Columns (1) and (2) of Panel A in Table 6 report the results of the Overidentification test:
Hansen J statistic 0.000 0.000
2SLS estimations. To further address the validity of the instruments, we
present the under-, weak-, and over-identification tests in Panel A of
Panel B: Omitted variable bias-corrected estimates
Table 6. Consistent with our expectations, MMIdiff (− 0.272) is nega­
δ=1
tively related to Digital, and the coefficient is statistically significant at R2max (R2max = ΠR2) R2max (R2max = ΠR2)
the 1% level in Column (1). In Column (2), the coefficient estimate of as 1.3 times as 1.5 times
MMIpolicy is significantly negative at the 1% level, which is consistent MMI − 0.377** − 0.370**
with our baseline results. Meanwhile, the Kleibergen-Paaprk LM statis­ (− 3.98) (− 3.41)

tics (testing for under-identification) are both significant at the 1% level,
indicating that the instrument is separately correlated with the endog­
enous variable. The Cragg-Donald F-test statistics of the two instruments
(i.e., MMIdiff and MMIpolicy) are greater than the critical value of 16.38
5 the 1% (5%) (10%) two-tailed level, respectively. The t-values in parentheses are
We followed Kaplan and Zingales (1997) and Lamont, Polk, and Saaá-
Requejo (2001) and used the KZ index to measure the degree of firm’s financial
constrain. We calculated the KZ index using the following equation:KZ =
-1.001909OCFA ± 0.2826389Q ± 3.139193LEV-39.3678DIVIDA-
1.314759CASHAwhere OCFA is calculated as net operating cash flow to total
book value of assets, Q as market to book ratio, LEV as total book value of debts
to total book value of assets, DIVIDA as dividends to total book value of assets,
and CASHA as cash holdings to total book value of assets.We constructed the
treat variable which equals one if firms’ financial constrain over its’ median by
industry and year, and zero otherwise.
In this table, we use the three methods (i.e., instrument variable regressions,
Heckman two stage model, and omitted variable bias-corrected estimates) to
address the potential endogeneity problems in our baseline regression results.
The definition of other variables is consistent to Table 1. Our sample firms are
from the CSMAR database with non-missing financial information for the period
2011 to 2020 with financial firms excluded. *** (**) (*) indicates significance at
adjusted by firm clustering. Year fixed effects Year F.E. and Firm fixed effects
Firm F.E. are included in all regressions but the coefficients are not reported.
(10% maximal IV size), suggesting the rejection of weak identification.
The Hansen J statistics (testing for over-identification) were not signif­
icant, suggesting a rejection of over-identification. After addressing the
potential reverse causality concern about maturity mismatched invest­
ment and digital orientation, we found stronger evidence to support our
baseline results.

8
M. Xu et al. International Review of Financial Analysis 91 (2024) 102957

Table 7 over zero), and zero otherwise. Then, we regressed the Probit model and
The moderating effect of DFI on maturity mismatched investment and digital calculated the inverse Mills ratio (IMR). Second, we added the IMR to
orientation. Model (1) in Section 3.3 and re-regressed Model (1). In column (3) of
(1) (2) (3) (4) Table 6, the coefficient estimate of MMI is − 0.321 and that of IMR is
Variables Digital Digital Digital Digital
significantly negative. These results indicate that our prior regression
results are robust after controlling for the sample selection bias.
MMIt-1 − 0.473** − 0.457** − 0.469** − 0.434**
(− 2.35) (− 2.11) (− 2.49) (− 2.56)
DFI 0.560*** 4.3.3. Omitted variable bias-corrected estimates
(5.00) Another concern preventing us from drawing a causal interpretation
MMIt-1 × DFI 0.171* between firms’ maturity mismatched investment and digital orientation
(1.86) using our baseline regressions is the omission of various problems. To
Breadth 0.579***
(5.08)
address the bias of omitted variables that may cause potential endoge­
MMIt-1 × Breadth 0.162 neity issues, we adopted the bias-corrected tests proposed by Oster
(1.61) (2019). The omitted variable bias might be less if the bias-adjusted co­
Depth 0.341*** efficient is close to the unadjusted coefficient of interest and the iden­
(4.83)
tified set excludes zero. We calculated the estimator to correct estimates
MMIt-1 × Depth 0.174**
(2.02) for omitted variable bias based on the coefficients and R2 from two sets
Digitization 0.017 of baseline two-stage regressions, that is the bias-adjusted coefficient
(0.29) (β-adj.). In Panel B of Table 6, we calculated the β-adj. Following Oster
MMIt-1 × Digitization 0.153** (2019), the Identified set established two key input parameters.
(2.08)
Size 0.092*** 0.091*** 0.092*** 0.093***
To be specific, we set the value of the relative degree of selection on
(5.27) (5.23) (5.30) (5.34) unobserved and observed variables (δ) to one as recommended by Oster
Roa 0.192 0.187 0.197 0.276 (2019). We then obtained the maximum R2 (R2max) from a hypothetical
(0.63) (0.62) (0.65) (0.90) regression of MMI on Digital and all unobserved and observed controls.
Lev − 0.258** − 0.255** − 0.260** − 0.241**
We set R2max (R2max = ΠR2) as 1.3 times (Π = 1.3) the R2 of the controlled
(− 2.28) (− 2.26) (− 2.30) (− 2.13)
Turnover 0.057 0.060 0.053 0.048 regression as suggested by Oster (2019). We also consider Π = 1.5,
(0.63) (0.67) (0.59) (0.54) following Liu, Li, and Lin (2023), and report the results separately in
SOE − 0.172*** − 0.172*** − 0.173*** − 0.197*** Panel B. The bias-adjusted coefficient (β-adj.) is − 0.377 with an the R2max
(− 4.24) (− 4.26) (− 4.25) (− 4.87) of 1.3 times and the bias-adjusted coefficient (β-adj.) is − 0.370 with an
Dual 0.133*** 0.135*** 0.133*** 0.145***
(3.29) (3.34) (3.27) (3.56)
R2max of 1.5 times. Apparently, these two bias-adjusted coefficients are
Top1 − 0.332** − 0.328** − 0.334** − 0.296* fairly similar to the unadjusted coefficient on MMI (− 0.141). Moreover,
(− 1.99) (− 1.97) (− 2.00) (− 1.78) the sets of bias-adjusted treatment effects (Identified set) excluded zero. In
Board 0.211** 0.210** 0.214** 0.195* summary, the omitted variable bias was not a major concern in our study.
(2.01) (2.00) (2.04) (1.85)
Independent 0.734* 0.728* 0.742* 0.663
(1.79) (1.78) (1.80) (1.61) 4.4. Moderator effects
Sharebalance − 0.015 − 0.015 − 0.016 − 0.009
(− 0.36) (− 0.34) (− 0.37) (− 0.21) Table 7 presents the moderating effects of financial inclusion on
Constant − 2.551*** − 2.624*** − 2.387*** − 2.116***
(− 5.89) (− 5.99) (− 5.58) (− 4.92)
maturity mismatched investments and digital orientation. To examine
Observations 14,823 14,823 14,823 14,823 the moderating effect of financial inclusion, we investigated the inter­
Adjusted R2 0.095 0.095 0.094 0.089 action term MMI×X. X is a vector of variables that proxies for the four
Year F.E. YES YES YES YES measures of DFI (DFT, Breadth, Depth, and Digitization). In Columns (1)–
Firm F.E. YES YES YES YES
(4) of Table 7, the coefficients of the interaction term are positive and
In this table, we examine the moderating effect of financial inclusion by using marginally significant for all measures. These results indicate that DFI can
Index, Breadth, Depth, and Digitization as the moderators, respectively. The def­ marginally moderate firms’ maturity mismatched investments in digital
initions of four moderating variables (i.e., DFI, Breadth, Depth, and Digitization) orientation. These results are consistent with the passive maturity mis­
have been discussed in the Section 3.2 and definitions of other variables are matched hypothesis: by alleviating transaction costs, DFI can mitigate
consistent to Table 1. We use the Peking University digital financial inclusion agency conflicts and enable firms with financial resource support, which
index and our sample firms are from the CSAMR database with non-missing
may lead firms to pursue digital orientation. Thus, the results support H2.
financial information for the period 2011 to 2020 with financial firms
excluded. *** (**) (*) indicates significance at the 1% (5%) (10%) two-tailed
level, respectively. The t-values in parentheses are adjusted by firm clustering. 4.5. Robustness test
Year fixed effects Year F.E. and Firm fixed effects Firm F.E. are included in all
regressions but the coefficients are not reported. To support our results, we used three methods to test the robustness
of the regression results. First, we used alternative measures of the
4.3.2. Heckman two stage model dependent variable. We used these dependent variables to ensure that
Second, we used the Heckman two-stage model to alleviate potential our results were not driven by selection bias in the measure of digital
sample selection bias. Sample selection bias refers to the deviation of orientation. According to the first alternative method, we used the ratio
conclusions owing to the non-randomness of sample selection (Heck­ of the digital intangible assets of firm i in year t by intangible assets of
man, 1979). To address the sample selection bias caused by the missing/ firm i in year t-1 to measure firms’ digital orientation.7 The regression
unobservable nature of firms’ digital orientations, we used the Heckman results for the dependent variable Digitalasset are reported in Columns
two-stage model. First, we constructed a dummy variable Digitaldum as
the dependent variable of the Probit model in the first stage.6 We
7
equaled Digitaldum to one if the firm has a digital orientation (Digital We used the intangible assets at the end of the year as disclosed in the notes
of the firms’ financial reports. Specifically, when the intangible assets include
Software, Network, Client, Management System, Intelligence, and other key­
words related to digital technology. The digital technologies that relate to
6
Other variables are consistent with Model (1) in Section 3.3. intangible assets should be summed up and calculated for in the current year.

9
M. Xu et al. International Review of Financial Analysis 91 (2024) 102957

Table 8
The robustness test by replacing the measures of digital orientation.
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Variables Digitalasset Digitalasset Digitalasset Digitalasset Digitalasset Digital_diff Digital_diff Digital_diff Digital_diff Digital_diff

MMIt-1 − 0.249*** − 0.803*** − 0.847*** − 0.701*** − 0.760*** − 0.472*** − 0.849*** − 0.891*** − 0.830*** − 0.708***
(− 4.21) (− 4.07) (− 4.00) (− 3.88) (− 4.56) (− 8.35) (− 3.94) (− 3.95) (− 4.17) (− 3.61)
DFI 0.258*** − 0.064***
(3.24) (− 6.66)
MMIt-1 × DFI 0.250*** 0.156*
(3.08) (1.89)
Breadth 0.236*** − 0.071***
(2.63) (− 6.88)
MMIt-1 × Breadth 0.270*** 0.174**
(3.06) (1.98)
Depth 0.179*** − 0.052***
(3.84) (− 5.92)
MMIt-1 × Depth 0.206*** 0.153**
(2.78) (2.01)
Digitization 0.058 − 0.051***
(1.39) (− 6.49)
MMIt-1 × Digitization 0.228*** 0.091
(3.52) (1.26)
Controls YES YES YES YES YES YES YES YES YES YES
Constant 1.187*** 0.953*** 0.945*** 1.021*** 1.131*** 0.484*** 0.439*** 0.450*** 0.428*** 0.430***
(3.71) (2.77) (2.71) (3.02) (3.41) (4.04) (3.25) (3.32) (3.17) (3.20)
Observations 13,576 13,576 13,576 13,576 13,576 12,363 12,363 12,363 12,363 12,363
Adjusted R2 0.034 0.040 0.039 0.040 0.037 0.022 0.027 0.027 0.026 0.026
Year F.E. YES YES YES YES YES YES YES YES YES YES
Firm F.E. YES YES YES YES YES YES YES YES YES YES

In this table, we examine the robustness of our regression results by using Digitalasset and Digital_diff as the dependent variables. These two measures of digital
orientation (Digitalasset and Digital_diff) in this table have been discussed in the Section 4.5 and definitions of other variables are consistent to Table 1. Our sample firms
are from the CSAMR database with non-missing financial information for the period 2011 to 2020 with financial firms excluded. *** (**) (*) indicates significance at
the 1% (5%) (10%) two-tailed level, respectively. The t-values in parentheses are adjusted by firm clustering. Controls variables, Year fixed effects Year F.E. and Firm
fixed effects Firm F.E. are included in all regressions but the coefficients are not reported.

(1)–(5) of Table 8. These results are consistent with the prior regression
results. Further, we replaced the dependent variable with the difference
in the value of the natural logarithm of digital assets from firm i in year t
and year t-1. As shown in Columns (6)–(10) of Table 8, these results
suggest that the regression results are robust in the measure of Digital_­
diff. Thus, our prior conclusions are not driven by selection variable bias.
Second, we use alternative measures of the independent variables.
We calculated the amount of maturity mismatched investment using the
prior Equation from Section 3.2.2. However, we used free cash flow in
the last period to eliminate the scale effect. Table 9 presents the
regression results for the independent variable MMIcash. Column (1) of
Table 9 shows a negative and highly significant association between
maturity mismatched investments and digital orientation. Meanwhile,
the coefficients of the interaction terms are positively significant in
Columns (2)–(5). These results indicate that our prior regression results
are robust after replacing the independent variable measures.
Third, the clustering hierarchy was adjusted. The logic of the clus­
tering adjustment standard error is to relax the assumption that the
random error terms are independent, allowing the correlation of inter­
ference terms of individuals in a group. However, the interference terms
of individuals in different groups did not correlate with each other. In
general, the higher the clustering hierarchy, the fewer parameter as­
sumptions that are applied to the correlation matrix, and the more
robust the results. Therefore, we changed the hierarchy of clustering
from firm to industry and re-regressed our model to test the robustness
of the research. As shown in Columns (1)–(5) of Table 10, these results
are consistent with the prior regression results. The results in Table 10
support our prior hypotheses and suggest that the regression results are
robust in adjusting the hierarchy of clustering.
5. Additional tests
5.1. Agency mechanism
Our evidence is consistent with the passive mismatch hypothesis:
maturity mismatched investments impede firms’ digital orientation. As
discussed earlier, we anticipated that agency costs can be an underlying
mechanism of the relationship between maturity mismatched invest­
ment and digital orientation. To test our conjecture, we employed the
degree of corporate governance, information asymmetry, and free cash
flows as proxies for agency problems. Due to managers’ self-serving
motivations, conflicts of interest between shareholders may lead firms
to serve agency costs through free cash flow. By contrast, firms with
strong governance can benefit users of financial information by con­
straining management’s self-motivated short-term behavior. Mean­
while, efficient governance may signal that firms with efficient
governance have lower possibilities of hoarding bad news.
Specifically, we constructed a dummy variable Government, which
equaled one if a firm’s investor protection index is over its median by
industry and year, and zero otherwise.8 We calculated firms’ informa­
tion asymmetry, as well as the degree of information disclosure trans­
parency by using the adjusted Jones model (Dechow, Sloan, & Sweeney,
1995; Jones, 1991). Accordingly, we constructed a dummy variable
Asymmetry that equaled one if firms’ discretionary accrual earnings are
over the median by industry and year, and zero otherwise. We calculated
free cash flows using the natural logarithm of net cash flows from
operating activities. We then constructed a dummy variable Cashflow
that equaled one if firms’ free cash flows are over its median by industry

8
We obtained the data for the accounting investor protection index (AIPI)
from the business school investor protection research center of Beijing Tech­
nology and Business University. Beijing Technology and Business University’s
accounting investor protection index (AIPI) website: https://sxy.btbu.edu.cn/.

10
M. Xu et al. International Review of Financial Analysis 91 (2024) 102957

Table 9
The robustness test by replacing the measures of maturity mismatched investment.
(1) (2) (3) (4) (5)

Variables Digital Digital Digital Digital Digital

MMIcasht-1 − 0.012* − 0.646** − 0.691** − 0.634** − 0.445**

(− 1.69) (− 2.29) (− 2.21) (− 2.36) (− 2.05)
DFI 0.269***
(15.25)
MMIcasht-1 × DFI 0.290*
(1.92)
Breadth 0.310***
(16.20)
MMIcasht-1 × Breadth 0.303*
(1.84)
Depth 0.218***
(12.69)
MMIcasht-1 × Depth 0.302**
(2.07)
Digitization 0.198***
(15.32)
MMIcasht-1 × Digitization 0.190*
(1.65)
Controls YES YES YES YES YES
Constant − 1.824*** − 2.365*** − 2.431*** − 2.393*** − 2.315***
(− 4.27) (− 5.86) (− 6.05) (− 5.88) (− 5.76)
Observations 13,219 13,219 13,219 13,219 13,219
Adjusted R2 0.037 0.239 0.242 0.232 0.236
Year F.E. YES YES YES YES YES
Firm F.E. YES YES YES YES YES

In this table, we examine the robustness of our regression results by using MMIcash as the independent variable. This measure of maturity mismatched investment
(MMIcash) in this table have been discussed in the Section 4.4 and definitions of other variables are consistent to Table 1. Our sample firms are from the CSAMR
database with non-missing financial information for the period 2011 to 2020 with financial firms excluded. *** (**) (*) indicates significance at the 1% (5%) (10%)
two-tailed level, respectively. The t-values in parentheses are adjusted by firm clustering. Controls variables, Year fixed effects Year F.E. and Firm fixed effects Firm F.E.
are included in all regressions but the coefficients are not reported.

Table 10
The robustness test by changing the type of clustering.
(1) (2) (3) (4) (5)

Variables Digital Digital Digital Digital Digital

MMIt-1 − 0.176* − 0.645* − 0.650 − 0.518 − 0.643*

(− 1.87) (− 1.92) (− 1.79) (− 1.83) (− 2.00)
DFI 0.493***
(7.96)
MMIt-1 × DFI 0.311*
(2.14)
Breadth 0.531***
(12.04)
MMIt-1 × Breadth 0.312*
(1.96)
Depth 0.303***
(6.18)
MMIt-1 × Depth 0.262*
(1.99)
Digitization − 0.023
(− 0.12)
MMIt-1 × Digitization 0.303**
(2.40)
Controls YES YES YES YES YES
Constant − 1.761*** − 2.875*** − 2.962*** − 2.535*** − 2.229***
(− 4.65) (− 5.55) (− 5.85) (− 4.16) (− 3.97)
Observations 14,823 14,823 14,823 14,823 14,823
Adjusted R2 0.080 0.081 0.081 0.080 0.076
Year F.E. YES YES YES YES YES
Firm F.E. YES YES YES YES YES

In this table, we examine the robustness of our regression results by changing the type of clustering. The definitions of other variables are consistent to Table 1. Our
sample firms are from the CSAMR database with non-missing financial information for the period 2011 to 2020 with financial firms excluded. *** (**) (*) indicates
significance at the 1% (5%) (10%) two-tailed level, respectively. The t-values in parentheses are adjusted by industry clustering. Controls variables, Year fixed effects
Year F.E. and Firm fixed effects Firm F.E. are included in all regressions but the coefficients are not reported.

11
M. Xu et al. International Review of Financial Analysis 91 (2024) 102957

Table 11
Maturity mismatched investment and digital orientation: agency mechanism.
(1) (2) (3)

Government Asymmetry Cashflow

Group = 1 Group = 0 Group = 1 Group = 0 Group = 1 Group = 0

Variables Digital Digital Digital Digital Digital Digital

MMIt-1 − 0.031 − 0.247*** − 0.195*** 0.034 − 0.148* − 0.130

(− 0.34) (− 2.94) (− 2.62) (0.30) (− 1.73) (− 1.37)
Size 0.109*** 0.128*** 0.133*** 0.120*** 0.158*** 0.096***
(6.19) (7.70) (7.85) (7.05) (8.92) (4.97)
Roa 0.053 − 0.620** − 0.461** 0.584 − 0.655*** 0.323
(0.18) (− 2.45) (− 2.07) (1.41) (− 2.70) (0.96)
Lev − 0.008 − 0.261** − 0.176 − 0.088 − 0.305*** 0.030
(− 0.07) (− 2.52) (− 1.63) (− 0.74) (− 2.78) (0.25)
Turnover − 0.214** 0.163* − 0.040 − 0.018 0.249* − 0.169**
(− 2.28) (1.66) (− 0.39) (− 0.21) (1.88) (− 2.14)
SOE − 0.273*** − 0.213*** − 0.246*** − 0.232*** − 0.238*** − 0.245***
(− 6.53) (− 5.76) (− 6.39) (− 5.87) (− 6.16) (− 5.77)
Dual 0.086** 0.093*** 0.096*** 0.055 0.100*** 0.068*
(2.41) (2.87) (2.89) (1.50) (2.98) (1.80)
Top1 − 0.256* − 0.167 − 0.183 − 0.257* − 0.095 − 0.284*
(− 1.66) (− 1.19) (− 1.22) (− 1.76) (− 0.63) (− 1.84)
Board 0.087 0.090 0.099 0.079 − 0.020 0.197*
(0.83) (0.90) (0.95) (0.80) (− 0.18) (1.88)
Independent 0.724* 0.402 0.632* 0.396 0.310 0.758**
(1.95) (1.13) (1.71) (1.14) (0.78) (2.07)
Sharebalance − 0.020 − 0.028 − 0.007 − 0.056 − 0.002 − 0.038
(− 0.53) (− 0.80) (− 0.17) (− 1.48) (− 0.07) (− 0.93)
Constant − 2.396*** − 2.743*** − 2.932*** − 2.486*** − 2.889*** − 2.635***
(− 5.52) (− 6.61) (− 6.87) (− 5.87) (− 6.37) (− 5.73)
Observations 7529 7234 7096 7727 7072 7691
Adjusted R2 0.273 0.255 0.263 0.261 0.249 0.279
Year F.E. YES YES YES YES YES YES
Firm F.E. YES YES YES YES YES YES

In this table, we examine the channel of agency hypothesis by using Government, Asymmetry, and Cashflow. Three agency problem measures in this table have been
discussed in the Section 5.1 and definitions of other variables are consistent to Table 1. Our sample firms are from the CSAMR database with non-missing financial
information for the period 2011 to 2020 with financial firms excluded. *** (**) (*) indicates significance at the 1% (5%) (10%) two-tailed level, respectively. The t-
values in parentheses are adjusted by firm clustering. Year fixed effects Year F.E. and Firm fixed effects Firm F.E. are included in all regressions but the coefficients are
not reported.

and year, and zero otherwise. We anticipated that the more inefficient
the corporate governance (Government Group = 0), the higher the in­
formation asymmetry (Asymmetry Group = 1), the higher the free cash
flow (Cashflow group = 1), and the heavier the agency problem the firms
may have.
Table 11 presents the results for the agency mechanisms. As shown,
the MMI coefficients is negative and significant for the low efficiency
corporate governance group (Group = 0) but is insignificant for high
efficiency corporate governance (Column 1). Column (2) shows that
MMI is significantly negatively associated with Digital in the high in­
formation asymmetry group (Group = 1), but is insignificant for the low
information asymmetry group. Column (3) shows that the coefficient
estimate of MMI is significantly negative for the high free cash flow
group (Group = 1), but insignificant for the low free cash flow group.
These results further support our prior agency conjecture: due to the
agency problem, managers of firms with a maturity mismatched
behavior avoid low short-term profits and hesitate to adopt a digital
orientation.
5.2. Risk-bearing channel
According to the “passive mismatch view,” maturity mismatched
investment can influence managers’ risk preferences, in that managers
make more conservative decisions. Thus, we anticipated that managerial
risk-bearing can be considered an underlying channel through which
maturity mismatched investments impede digital orientation. In order to
test our prior conjecture, we employed operating risk, bankruptcy risk,
and stock price crash risk as proxies for a firm’s potential risk.
First, we measured operating risk (Operisk) following Acharya, Gale,
and Yorulmazer (2011) and using the volatility of earnings.
√̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅
( )̅
√
√ 1 ∑ T
1∑ T
OperatingRisk = √ Ei,t − Ei,t |T = 4 (5.2.1)
T − 1 t=1 T t=1
where Ei,t is earnings before interest and tax scaled by firm i in year t by
the assets of firm i in year t-1. Furthermore, because the operating risk
calculated using the above equation does not follow a normal distribu­
tion, we used the cumulative distribution probability of earnings vola­
tility to measure operating risk (Operisk).
We then measured bankruptcy risk using the following model (Ohl­
son, 1980):
Oscore = − 1.32 − 0.407SIZE + 6.03TLTA − 1.43WCTA + 0.0757CLCA
− 2.37NITA − 1.83FUTL + 0.285INTWO − 1.72OENEG − 0.512CHIN
(5.2.2)
where SIZE is calculated as the natural logarithm of firm’s book value of
total assets; TLTA as book value of total liabilities divided by book value
of total assets; WCTA as book value of working capital divided by book
value of total assets; CLCA as book value of current liabilities divided by
book value of current assets; NITA as book value of net profit divided by
book value of total liabilities; FUTL as book value of operating net cash
flow divided by book value of total liabilities; INTWO is defined as a
dummy variable that equals one if firm i’s net income was negative for
the past two years and zero otherwise; OENEG as a dummy variable that
equals one if firm i’s book value of total liabilities exceeds book value of
total assets and zero otherwise; and CHIN as (NIt-NIt-1)/(|NIt| + |NIt-1|),
where NIt is net income for the most recent period. All variables were

12
M. Xu et al. International Review of Financial Analysis 91 (2024) 102957

Table 12
Maturity mismatched investment and digital orientation: risk-bearing channel.
(1) (2) (3) (4) (5) (6) (7) (8)

First stage Second stage First stage Second stage First stage Second stage First stage Second stage

Operisk Digital Oscore Digital Ncskew Digital Duvol Digital

MMIt-1 0.023*** − 0.227*** 0.191*** 0.264***

(8.58) (− 11.51) (3.65) (5.65)
Operisk − 13.288***
(− 3.75)
Oscore 2.175***
(6.21)
Ncskew − 2.300***
(− 3.22)
Duvol − 1.661***
(− 4.29)
Size 0.000 0.148*** 0.012*** 0.099*** 0.069*** 0.284*** 0.067*** 0.237***
(0.22) (15.39) (4.71) (8.20) (10.24) (5.74) (11.16) (8.75)
Roa − 0.000 − 0.459** − 4.977*** 9.637*** − 0.290** − 1.889*** − 0.627*** − 2.263***
(− 0.02) (− 2.27) (− 95.80) (5.79) (− 2.17) (− 3.94) (− 5.23) (− 5.27)
Lev − 0.017*** − 0.688*** 6.484*** − 14.578*** − 0.321*** − 1.222*** − 0.326*** − 1.026***
(− 8.43) (− 8.05) (402.14) (− 6.42) (− 7.67) (− 4.84) (− 8.71) (− 6.87)
Turnover 0.000 0.010 0.679*** − 1.462*** − 0.018 − 0.042 − 0.016 − 0.028
(0.04) (0.14) (34.04) (− 5.87) (− 0.34) (− 0.31) (− 0.34) (− 0.28)
SOE 0.004*** − 0.164*** − 0.001 − 0.255*** − 0.032** − 0.330*** − 0.021 − 0.291***
(6.26) (− 6.33) (− 0.25) (− 10.84) (− 2.11) (− 7.23) (− 1.56) (− 9.52)
Dual 0.001* 0.176*** − 0.006 0.129*** 0.008 0.125*** − 0.000 0.107***
(1.92) (7.66) (− 1.06) (5.73) (0.56) (3.29) (− 0.01) (3.78)
Top1 − 0.030*** − 0.774*** − 0.073*** − 0.364*** − 0.066 − 0.709*** − 0.069 − 0.673***
(− 10.70) (− 5.73) (− 3.18) (− 3.72) (− 1.10) (− 4.42) (− 1.30) (− 5.68)
Board 0.005** 0.086 0.051*** − 0.155** 0.090** 0.177 0.068* 0.084
(2.29) (1.37) (3.21) (− 2.35) (2.15) (1.38) (1.83) (0.97)
Independent 0.000 0.322 0.075 0.374* − 0.045 0.462 − 0.109 0.383
(0.03) (1.56) (1.37) (1.68) (− 0.32) (1.24) (− 0.86) (1.36)
Sharebalance − 0.005*** − 0.064** − 0.013** 0.031 − 0.022 − 0.055 − 0.024* − 0.045
(− 6.57) (− 2.24) (− 2.38) (1.32) (− 1.49) (− 1.34) (− 1.84) (− 1.50)
Constant 0.402*** 3.081** − 2.216*** 3.200*** − 1.018*** − 3.965*** − 0.800*** − 2.953***
(51.04) (2.10) (− 34.21) (3.78) (− 6.09) (− 4.94) (− 5.36) (− 6.98)
Observations 13,053 13,053 13,231 13,231 13,237 13,237 13,237 13,237
R2 0.023 – 0.952 – 0.008 – 0.013 –
Year F.E. YES YES YES YES YES YES YES YES
Firm F.E. YES YES YES YES YES YES YES YES

In this table, we examine the mediating effect between maturity mismatch and digital orientation, by using 2SLS (Shaver, 2005). The measures of operating risk (i.e.,
Operisk), bankruptcy risk (i.e., Oscore) and stock price crash risk (i.e., Ncskew and Duvol) in this table have been discussed in the Section 5.2 and definitions of other
variables are consistent to Table 1. Our sample firms are from the CSAMR database with non-missing financial information for the period 2011 to 2020 with financial
firms excluded. *** (**) (*) indicates significance at the 1% (5%) (10%) two-tailed level, respectively. The t-values in parentheses are adjusted by firm clustering. Year
fixed effects Year F.E. and Firm fixed effects Firm F.E. are included in all regressions but the coefficients are not reported.

measured at the end of fiscal year t. The lower the value of Oscore, the where n is the number of trading days of firm i in year t. The higher the
more likely it is that a firm has a higher bankruptcy probability. value of Ncskewt, the more likely it is for a stock to crash.
For the stock price crash risk measure, we followed Chen, Hong, and The second stock price crash risk measure, Duvolt was calculated as
Stein (2001), Hutton, Marcus, and Tehranian (2009), and Kim, Li, and the asymmetric volatility of negative versus positive returns, using the
Zhang (2011) and first estimated firm-specific weekly returns for each following model:
firm and year. Specifically, the firm-specific weekly return, denoted by {[ ]/[ ]}
W, is defined as the natural logarithm of one plus the residual return ( )∑ 2 ∑
Duvoli,t = ln nup − 1 Wi,τ (ndown − 1) Wi,2τ (5.2.5)
from the following regression:
down up

Ri,τ = αi + β1 Rm,τ− 2 + β2 Rm,τ− 1 + β3 Rm,τ + β4 Rm,τ+1 + β5 Rm,τ+2 + εi,t (5.2.3)

Based on whether Wi,τ is greater than the average firm-specific daily
return in year t, we divided the trading weeks into up and down weeks.
where Ri,τ is the return on firm i in week τ and Rm,τ is the value-weighted
In Eq. (5.2.5), where nup and ndown are the number of up and down
average return on the A-share circulated market in week τ. We included
weeks, respectively, the higher the value of Duvoli,t, the more likely it is
lead and lag patterns to adjust for the effects of desynchronized trading.
for a stock to crash.
The firm-specific weekly return for firm i in week τ was measured by the
Table 12 presents the results for the risk-bearing channels. We fol­
natural logarithm of one plus the residual return in Eq. (5.2.3), that is,
lowed Shaver (2005) and used the 2SLS to examine the channel between
Wi,τ = ln(1 + εi,τ). To estimate Eq. (5.2.3), we required at least 26 weekly
maturity mismatched investment and digital orientation. Columns (1)
return observations for each firm and year.
and (2) of Table 10 present the regression results with operating risk
The first stock price crash risk measure, Ncskewi,t was calculated as
(Operisk) as the mediating variable. In Column (1), the coefficient of
the negative skewness of firm-specific weekly returns, using the
MMI is significantly positive at the 1% level, and in Colum (2) the co­
following equation:
efficient of Operisk is significantly negative at the 1% level. These results
[ ∑ ]/[ (∑ )3/2 ] suggest that maturity mismatched investments can enhance firms’ po­
Ncskewi,t = − n(n − 1)3/2 Wi,3τ (n − 1)(n − 2) Wi,2τ
tential operating risk, which can influence managers’ risk preferences,
(5.2.4) that is, leading them to take more conservative decisions. Columns (3)

13
M. Xu et al.
and (4) present the regression results for bankruptcy risk (Oscore) as a
mediating variable. In Column (3), the coefficient of MMI is significantly
negative at the 1% level, and in Column (4) the coefficient of Oscore is
significantly positive at the 1% level. These results suggest that maturity
mismatched investments can aggravate firms’ potential bankruptcy risk,
which may impede managers’ risk-bearing and lead firms to be hesitant
toward adopting a digital orientation. Columns (5)–(8) present the
regression results for stock price crash risk (Ncskew and Duvol) as the
mediating variable. As Columns (5) and (7) show, the coefficients of
MMI are significantly positive at the 1% level, and those of Ncskew and
Duvol are significantly negative (Columns 6 and 8). These results show
that firms with more maturity mismatched investments can be exposed
to higher stock price crash risk, thus affecting managers’ risk-bearing
behavior and impeding their preference for digital orientation. In gen­
eral, these results further support the risk-bearing channel as the focus of
our study.
6. Conclusion
This study examined the effect of maturity mismatched investments
on firms’ digital orientation and tested two competing hypotheses. We
found that firms with more maturity mismatched investments impede
their digital orientation, and DFI further weakens the negative rela­
tionship between firms’ maturity mismatched investment and digital
orientation. The evidence is consistent with the agent hypothesis:
maturity mismatched investment behavior makes managers hesitant
toward nearing potential risk, which impedes the adoption of a digital
orientation. Finally, we discussed the possible underlying mechanisms
through which maturity mismatched investments impede digital orien­
tation. We found that maturity mismatched investments can expose
firms to higher bankruptcy risk and stock price crash risk, which in­
fluences managers’ risk preference, in that managers become hesitant to
adopt a digital orientation. Overall, our study offers novel evidence of a
previously underexplored consequence of maturity mismatched invest­
ment, namely, its negative effect on firms’ digital orientation.
The findings of this study have several practical implications. First,
they suggest that the demand side of firm debt should be considered
closely in Chinese policymaking. For instance, policymakers should
strengthen the supervision and administration of debt utilization to
avoid the liquidity risks caused by excessive short-term debt ratios. If a
firm is frequently forced to mismatch its maturity, it may face a greater
risk of debt rollover and may even go bankrupt because of ruptures in
the capital chain caused by a high short-term debt ratio. Second, the
Chinese government should develop strategies to broaden DFI. The
development of DFI could enhance the accessibility of financial services
and alleviate transaction costs. For example, DFI can help firms increase
their financial service penetration and remove barriers to access, while
maintaining profitability and growth. Policymakers can use FinTech
providers to deliver digital financial services that enable financial in­
stitutions to provide services at a low cost. Doing so may alleviate firms’
financial constraints and enhance their willingness to pursue a digital
orientation.
Data availability
Data will be made available on request.
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