Financialization, Earnings Management and Investment Efficiency

Lin, Zhenlong; Li, Shuanghai

doi:10.1007/978-3-030-49829-0_10

Cited by 1 publication

(1 citation statement)

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“…Liu et al [7] confirmed the inverted-U relationship between corporate financialization and R&D investment, indicating that moderate financialization can promote corporate innovation, while excessive financialization significantly inhibits it. In terms of investment efficiency, Lin et al [8] and Gong et al [3] have reached consistent findings, suggesting that corporate financialization suppresses the inefficient investment behavior of enterprises. Wang et al [9] demonstrated the inverted U-shaped relationship between corporate financialization and TFP.…”

Section: Introductionmentioning

confidence: 78%

Nonlinear Impact of Corporate Financialization on Sustainable Development Ability: Evidence from Listed Companies in China

Chen,

Nie,

Huang

2024

Sustainability

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This paper takes 1179 non-financial listed companies in China from 2010 to 2021 as samples and constructs a panel fixed-effect model to examine the effect of corporate financialization on sustainable development ability. Also, we further use the moderating effect model and the mediating effect model to explore the moderating roles played by financing constraints and environmental uncertainty, as well as the influencing mechanisms transmitted by financialization motives. The results are as follows: (1) There is a significant and robust inverted U-shaped relationship between corporate financialization and sustainable development ability, which indicates the existence of a moderate range of corporate financialization in regard to the sustainable development ability of companies. (2) Financing constraints and environmental uncertainty have moderating effects on the inverted U-shaped relationship between corporate financialization and sustainable development ability. With high financing constraints (environmental uncertainty), the sustainable development ability of companies reacts more sensitively to thep change in corporate financialization level. (3) Companies hold financial assets with precautionary saving motive in the low financialization level, and the reservoir effect plays a dominant role. The sustainable development ability of companies is enhanced. However, companies increase their holdings of financial assets for speculative arbitrage motive in the high financialization level, where the short-term wealth effect becomes dominant. The results of this paper are helpful for companies’ decision-making in sustainable development and for government policy formulation in economic development.

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Section: Introductionmentioning

confidence: 78%