Abstract: In this paper, the state-owned enterprises of Shanghai and Shenzhen A-share from 2012 to 2020 were selected as samples to empirically analyze the relationship between digital finance and over-investment of state-owned enterprises. The study found that digital finance has a significant inhibitory effect on the over-investment of state-owned enterprises, and digital finance can restrain the over-investment of state-owned enterprises by reducing the agency cost of state-owned enterprises. In addition, market competition and executive background characteristics play a regulatory role in the impact of digital finance on the over-investment of state-owned enterprises, and market competition can strengthen the inhibition of digital finance on the over-investment of state-owned enterprises. The longer term of office of senior executives is conducive to the suppression of over-investment of state-owned enterprises by digital finance, but the age and gender of senior executives play a negligible role. Furthermore, the coverage and use depth of digital finance have more obvious effects on the over-investment of state-owned enterprises. Compared with central enterprises, digital finance has a more significant impact on the over-investment of local state-owned enterprises. Compared with specific functional state-owned enterprises, digital finance has a more significant impact on the over-investment of general competitive state-owned enterprises.