Organization Capital and Corporate Financialization: Evidence From China

Abstract

This paper investigates the impact of organization capital on corporate financialization. Based on the data of Chinese A‐share listed firms from 2014 to 2020, we find that organization capital is positively related to corporate financialization. After a series of robustness tests and endogeneity tests, the conclusion still holds. We further find that agency theory is the potential channel driving our findings. Precautionary savings theory, executive overconfidence theory and resource‐based theory do not hold in our study. Furthermore, we find that the positive effect of organization capital on corporate financialization is stronger when firms are hit by severe external natural disasters shocks.