Abstract: Currently, enterprises are vigorously carrying out digital transformation. So, what impact does digital transformation of enterprises have on their debt financing costs? This paper constructs a dual risk model from the perspectives of information risk and default risk and takes Chinese A-share listed companies from 2007 to 2020 as samples to test the impact of corporate digital transformation on debt financing costs and its affecting mechanism. The findings show that the digital transformation of enterprises can improve the quality of accounting information disclosure and the expected returns of enterprises, thereby reducing their information risk and default risk, and ultimately lowering their debt financing costs. The analysis of the regulated intermediate mechanism reveals that corporate tax avoidance will weaken the role of digital transformation in improving the quality of accounting information disclosure, but enhance the role of digital transformation in improving the expected returns of enterprises. To this end, the government should vigorously promote the digital transformation of enterprises, and enterprises should adopt advanced financial software and big data analysis tools, improve the automation and intelligence level of financial reports, reduce human errors, and enhance the comparability and readability of information.

Key words: corporate digital transformation, debt financing cost, corporate tax avoidance, information risk, default risk