The model of financial performance evaluation of Guangdong real estate enterprises under digital transformation management
Authors: Xu Zhen , Sukpasjaroen Khunanan 
Published: September 2024

Introduction: The digital era has ushered in transformative changes across industries, with the real estate sector being a pivotal focus. In Guangdong Province, China, real estate enterprises are at the forefront of this digital revolution, navigating the complexities of technological integration and market adaptation. This study delves into the intricacies of digital transformation and its profound implications for the financial performance of these enterprises. The rapid evolution of digital technologies necessitates examining how such advancements redefine operational strategies and financial outcomes within the real estate landscape. The inclusion of government support as a variable in our study is deliberate and stems from its profound influence on shaping the digital landscape. Government policies and initiatives provide a regulatory framework and offer strategic direction and financial incentives that catalyze digital adoption and integration within the real estate sector. By examining the moderating effect of government support, this study aims to uncover the nuanced interplay between policy-driven environments and the financial performance of enterprises undergoing digital transformation. This exploration is essential to understanding the broader implications of public policy on private-sector innovation and growth. Objectives: The primary objective of this research is to evaluate the impact of digital transformation on the financial performance of Guangdong’s real estate enterprises, with a specific focus on return on equity (ROE) and return on assets (ROA). Additionally, this study aims to scrutinize the role of government support as a potential moderator in the relationship between digital transformation and financial success. The research seeks to provide actionable insights for policymakers and industry players by understanding these dynamics. The digital transformation of Guangdong’s real estate sector presents a complex landscape of challenges and opportunities that shape the industry’s evolution. On one hand, the integration of innovative digital technologies into established operational frameworks poses significant challenges. These include the need for substantial investment in new infrastructure, the imperative for a cultural shift towards digital literacy across the workforce, and the continuous demand for upskilling to remain agile in an increasingly digital market. On the other hand, digital transformation affords manifold opportunities. For instance, enhanced operational efficiencies through automation and data analytics offer substantial benefits in terms of cost savings and process optimization. Furthermore, leveraging data-driven insights enables more informed strategic decision-making, which is critical in a competitive real estate market. The capacity to innovate service offerings by tapping into digital platforms and customer relationship management systems also presents a significant opportunity for real estate enterprises to differentiate themselves and capture new market segments. Methods: This study explores the digital transformation of real estate firms in Guangdong, highlighting government support as a critical moderator. Findings show that digital initiatives improve company performance, with government backing amplifying these benefits. Regional disparities in support suggest a need for tailored strategies, indicating the importance of policy in driving digital adoption and innovation in the sector. The study advises firms to leverage local policies and policymakers to address regional imbalances for equitable digital transformation. This study uses a sample of 28 real estate enterprises in Guangdong Province from 2012 to 2022. Panel data analysis with a fixed effects model tests the hypotheses. The study also conducts robustness checks by replacing the key variables. Results: The findings indicate that digital transformation positively impacts the financial performance of real estate firms, as gauged by return on equity (ROE) and return on assets (ROA), albeit marginally. The study also reveals that the relationship between enterprise performance and digital transformation is moderated by government assistance, indicating that solid government backing might amplify the benefits of digital transformation for company success. Conclusion: The present research offers empirical data about the correlation between the financial performance of real estate firms in Guangdong Province, China, and digital transformation. The discussion of these challenges and opportunities is contextualized within the broader economic and technological context of Guangdong Province, reflecting the unique interplay between regional development strategies and the global trend toward digitalization. This nuanced understanding is essential for appreciating the complexities inherent in the digital transformation journey of real estate enterprises. It sets the stage for the relevance and application of our proposed model. The findings suggest that real estate enterprises should consider factors like business size, cash flow, and debt ratios when undergoing digital transformation. Policymakers and industry regulators should also focus on providing appropriate support and guidance to facilitate the long-term development of the real estate industry in the digital era.