The impact of directors’ information technology experience on the financing constraints of internet start-ups—Data mining with python on the China’s New OTC market

TL;DR

This study shows that directors with IT experience help reduce financing challenges for internet startups, partly by improving media perception.

Contribution

The novel use of Python-based text mining to analyze how directors' IT backgrounds and media tone affect financing constraints in Chinese internet startups.

Findings

Directors with IT backgrounds reduce financing constraints for internet startups.

IT-experienced directors positively influence the tone of media reports about the company.

Media tone acts as a mediator between directors' IT expertise and financing outcomes.

Abstract

In the era of Internet information technology, the IT background of directors plays a significant role in corporate governance. However, existing research lacks sufficient discussion on the financing constraints faced by Internet startups. This paper examines Internet entrepreneurial enterprises listed on the New Third Board as the research sample. Using content analysis coding methods and Python software for text mining, the study empirically analyzes the impact of directors’ IT backgrounds and media reports on the financing constraints of these enterprises. The results indicate the following: First, directors with IT backgrounds help reduce the financing constraints of Internet startups. The higher the directors’ proficiency in information technology, the more favorable it is for obtaining financing. Second, directors with IT backgrounds have a significant positive impact on the tone of media reports. Third, the tone of media reports reflects the spirit and development of the enterprises, serving as a mediating factor between directors’ IT backgrounds and the financing constraints of the enterprises. The findings of this study are valuable for guiding Internet startups to better leverage the IT expertise of their directors. Additionally, they provide useful insights for reducing the financing constraints faced by these startups.

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