Can Online Sales Reduce the Cost of Debt Financing for Companies? Evidence from Big Data of E-Commerce Sales

With the unique data on Chinese listed companies’ online sales through e-commerce platforms from 2015-2020, this paper investigates the impact of online sales on firms’ debt financing costs. The results show that online sales significantly reduce firms’ debt financing costs, and the findings remain consistent after estimating instrumental variables using the national e-commerce demonstration city pilot construct. The mechanistic analysis finds that online sales reduce the degree of corporate surplus management and improve accounting robustness. Online sales’ financing cost reduction effect is more prominent for companies with fewer analysts following them and lower audit quality. It is found that online sales diminish corporate debt financing costs by reducing corporate information risk and debt agency risk. Further analysis found that the more difficult it is to raise funds, the more online sales reduce their debt financing costs. The findings of this paper provide empirical evidence on the role of alternative data, such as online sales, in the financing market, which is important for understanding the business and credit behavior of Chinese firms in the Internet era