Abstract: Digital finance is of great significance to relieve the financing dilemma and reduce the financing cost of enterprises. However, research on the differential effects and mechanisms of digital finance in various financing models is relatively scarce. This paper using data from Shanghai and Shenzhen A-share listed companies from 2011 to 2020, explores the heterogeneous impact of digital finance on debt and equity financing costs, and investigates the mechanisms from the perspectives of internal earnings management and external information disclosure.The study finds that the resource and governance effects of digital finance can significantly reduce corporate financing costs. However, the cost reduction effect is more pronounced for debt financing compared to equity financing. Additionally, earnings management and the quality of information disclosure serve as mediators in debt financing, while only information disclosure is effective in equity financing. Further analysis reveals that firms with lower management shareholding, larger sizes, and those in high-tech sectors benefit more from digital finance in reducing equity financing costs. Conversely, firms in regions with higher financial marketization and smaller-scale enterprises benefit more significantly from reduced debt financing costs. This study contributes to financial institutions in providing precise services, optimizing corporate financing strategies and information management, and advancing the development of digital finance in China.

Key words: digital finance, financing cost, financing mode, information asymmetry, earnings management, information disclosure