Does corporate digital transformation reduce the level of corporate leverage manipulation?

Digital transformation (DX) has emerged as a key focus in Chinese enterprises' strategic realignment, but its effectiveness in mitigating leverage manipulation remains debatable. Using data from A-share listed companies in China, this study empirically investigates the impact of DX on corporate leverage manipulation. Results show that DX significantly reduces leverage manipulation. Furthermore, DX has a particularly strong mitigating effect on non-state-owned enterprises, small and medium-sized enterprises, and companies located in less marketized regions. By filling a gap in the existing literature on the relationship between DX and leverage manipulation, this study illuminates the pivotal role of digital strategies in fortifying financial market stability.