Managerial Competence and Corporate Financialization

Abstract

Along with the downward pressure of domestic and foreign economies, some real enterprises deviate from their main business to allocate financial assets, and the funds flowing to the real economy sector keep decreasing, which to some extent crowds out the enterprises' investment in their main business and may lead to the financialization of enterprises. This paper incorporates managerial competence under the rationality hypothesis into the analytical framework and examines the impact of managerial competence traits on corporate financialization using Shanghai and Shenzhen A-share listed companies from 2010 to 2020 as the research sample. It is found that managerial competence significantly promotes corporate financialization, mainly in terms of increasing short-term financial asset allocation, which provides some reference and reference for real enterprises to make reasonable investment decisions.