Research on Whether Enterprise Financialization Can Improve Enterprise Investment Efficiency

Zitong Zhang

doi:10.54097/hbem.v6i.6314

Authors

Zitong Zhang

DOI:

https://doi.org/10.54097/hbem.v6i.6314

Keywords:

Corporate Financialization; The Efficiency of Corporate Investment; The Ability of Earning Cashflow; Interest-Bearing Debt; Financial Risk.

Abstract

This paper examines the relationship between corporate financialization and the efficiency of corporate investment and explores the mechanisms, taking non-financial listed companies in the Chinese A-share market as a sample. The study finds that corporate financialization has a significant positive impact on the efficiency of corporate investment. The results of the mechanism analysis show that corporate financialization can improve the efficiency of corporate investment by reducing the ability of earning cashflow, alleviating corporate interest-bearing debt and enhancing financial risk. The results of the heterogeneity analysis show that the positive effect of financialization on investment efficiency is more pronounced among manufacturing firms and firms located in non-high administrative class cities. This study has implications for the use of financialization tools by firms to serve physical investment and thus optimize their investment efficiency.

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