Note(s): This table reports two-stage regression analyses on whether enterprise digital development reduces the surge of investment and in turn, increases capacity utilization. Columns (1) and (2) report the first-stage regression estimates for the effect of digital development on the surge of investment. The dependent variable is investment similarity, Inv_Simi, proposed by Jing and Zhang (2021). The key independent variables are digitization development proxies, DigitalW and DigitalS. Control variables include Size, Leverage, ROA, CFO, TFP, Employee, Age, BSize, IndR, SH1, SOE and HHI. Columns (3) and (4) report the second-stage regression estimates for the effect of digtial-related reductions in investment surges on capacity utilization. The dependent variable is capacity utilization, CU. The key independent variables, $Inv_SimiWˆ(Inv_SimiSˆ)$ are the predicted DigitalW (DigitalS) based on the first-stage regression, capturing the part of investment similarity that can be explained by digital development. Control variables are the same as those in the first-stage regression. For brevity, we do not report the coefficients of the control variables. Standard errors are all heteroscedastic, robust, clustered at the firm level.  Appendix 2 presents variable definitions. Continuous variables are winsorized at the 1 and 99% levels. ∗, ∗∗ and ∗∗∗ represent significance levels of 10, 5 and 1%, respectively

Source(s): Authors’ own work