How corporate financialization affects main business performance-Empirical evidence based on a dynamic panel...

Area of Science:

• Economics
• Finance
• Business Studies

Background:

• Corporate financialization is a significant trend in China's economy.
• Understanding its effect on the core operations of real enterprises is critical.

Purpose of the Study:

• To investigate the relationship between corporate financialization and enterprise performance in China.
• To identify potential threshold effects and heterogeneous impacts based on company characteristics.

Main Methods:

• Utilized data from A-share non-financial listed companies in China (2013-2022).
• Employed a dynamic panel threshold model to analyze the corporate financialization-performance nexus.
• Examined heterogeneity across ownership, asset maturity, industry, and regional factors.

Main Results:

• A significant threshold effect was identified at 5.82% corporate financialization.
• Corporate financialization exhibits a dual effect: positive at lower levels and negative beyond the threshold.
• Heterogeneous impacts were observed based on ownership type, asset maturity, industry, and geographical location.

Conclusions:

• Corporate financialization's impact on main business performance is non-linear, contingent on a critical threshold.
• Policy and management strategies should consider these nuanced effects and variations in corporate characteristics.
• Further research into the mechanisms driving these heterogeneous outcomes is warranted.