Abstract: Currently, the digital economy has become the new engine of China’s high-quality economic development. In this context, it is urgent for enterprises to promote digital transformation. For this purpose, this paper takes China’s A-share listed companies from 2015 to 2022 as samples to investigate the impact of the equity investments by city investment platforms on enterprises’ digital transformation and its underlying mechanisms. The findings show that the equity investment by city investment platforms can enhance the digitalization level of enterprises. The mechanism test reveals that after the city investment platform invested in enterprises, it could alleviate the enterprises’ financing constraints, improve their innovation capacity, and reduce their agency costs. Therefore, the investment of the city investment platform in enterprises can promote the digital transformation of enterprises. The heterogeneity analysis shows that if the city investment platform has higher credit rating, higher administrative level and higher shareholding ratio, the enterprises that invested on the city investment platform will play a more obvious role in promoting the digital transformation of the enterprises. Therefore, it is necessary to actively promote the cooperation between enterprises and city investment platforms to promote the digital transformation of enterprises.

Key words: city investment platform equity investment, digital transformation, resource effects, governance effects, enterprise innovation