International Conference on Information and Knowledge Technology

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Impact of ICT and Digital Evolution on Capital Structure in Companies

Authors :

Ali Noori¹

1- Payame Noor University

Keywords :

Digital transformation،ICT adoption،capital structure،leverage adjustment

Abstract :

In the contemporary global economy, the pervasive integration of digital technology has fundamentally reshaped corporate operations and strategic imperatives, particularly influencing capital structure decisions. This paper investigates the impact of digital transformation on firms' financial leverage, drawing on empirical evidence from a novel sample of listed companies. Using a panel dataset of non-financial firms on the Tehran Stock Exchange (TSE) from 2010-2022, sourced from Rahavard Novin and supplemented by a global benchmark from Refinitiv Eikon, we employ fixed-effects and 2SLS regression models. Our results demonstrate that digital transformation, measured by the frequency of AI and big data-related keywords in annual reports, significantly reduces corporate leverage ratios by 11.2% while accelerating adjustment speeds toward optimal structures. Mechanism analyses reveal that this effect operates through alleviated financial constraints, improved internal governance, and reduced information asymmetry. Heterogeneity tests indicate stronger effects in manufacturing sectors and family-owned enterprises. Our novel contribution includes the Digital Leverage Adjustment Framework (DLAF), which integrates digital adoption with dynamic capital structure theory, accounting for market volatility. The findings provide actionable insights for managers in emerging markets to leverage digital tools for financial resilience, with policy implications for fostering robust digital finance ecosystems.