Studies Of The Financial Impacts Of Financialization On Listed Companies

Financialization is an important tendency of world economy since the 1980s. In recent years, the financialization of non-financial listed companies has become one of the hot topics in academic research. However, there are many questions still remain to be further analyzed. The analysis of non-financial listed companies’ financialization and their financial effects have important theoretical significance and practical value. On the basis of existing literatures, this article defines the financialization of non-financial listed companies as the "increasing role of financial activities, financial institutions and financial expertise in the operations and management of non-financial listed company". This paper puts forward the three-dimensional methodology to measure the financialization of listed companies in the perspective of assets, equity and management.Using Chinese non-financial listed companies as research samples, this research analyzed the impacts of financialization on capital expenditure, capital structure and its dynamic adjustment, the corporate value, by building and estimating the stochastic frontier model, threshold panel auto-regression model, static and dynamic panel model. The main research findings are as follows:Firstly, using panel model, this research verifies Stockhammer (2004), Crotty (2005) and Orhangazi’s (2008) research findings that the asset financialization has inhibitory effects on capital expenditure which is a common phenomenon of the non-financial companies across the world, and my research also reveals that the management financialization has a significantly positive impact on the capital expenditure while the correlation between equity financialization and capital expenditure is not significant. Using threshold panel auto-regression model, we further find that there are threshold effects in the impacts of the assets financialization, equity financialization and management financialization on capital expenditure.Secondly, based on the models of Flannery & Rangan’s (2006) and Huang Hui’s (2010) research on capital structure, this paper find that the financialization of assets, equity and management all are negative correlated with the capital structure significantly. Using dynamic panel model to handle endogeneity problem, however, I find both of the assets financialization and equity financialization have significantly positive correlation with the dynamic adjustment speed of capital structure, while the correlation between management financialization and dynamic adjustment speed of capital structure is significantly positive only if the capital structure is measured by market value.Thirdly, based on existing methods in the literatures of Jensen & Meckling (1976) and Su Zhi & Lian Yujun (2011), the research uses Tobin’s Q which is optimized by stochastic frontier model as a proxy variable of corporate value. Using dynamic panel model to handle endogeneity problem, this research find the correlation between asset financialization and corporate Tobin’s Q value is "inverted U" shape, which means that too low or too high proportion of financial assets investment will reduce the corporate value. The correlation between equity financialization and corporate value is significantly positive, and the financialization of management has no significant impact on the corporate value.Moreover, this paper also presents possible explanations of above findings respectively. This paper empiricaly analyzed the impacts of the financialization of non-financial listed companies on the capital expenditure, capital structure and its dynamic adjustment, and corporate value, which contributes to the research on the micro-level financialization. This paper also has a guiding significance to the research of financialization of listed companies both on the theory and practice aspects.