Peer Effects Of Chinese Listed Companies' Financialization

Under the background of poor returns on industrial investment,but increasing profits in the financial sector,more and more non-financial companies are trying to seek the new profit growth through real estate or financial investment,which not only intensifies the excessive inflation of virtual economy,holds back real enterprises' core business development,but also leads to the financialization trend of entity industry and the agglomeration of systemic financial risks in the industrial sector,and finally hinders the sustainable development of economy.Then,what are the deep reasons for the corporate financialization? In accordance with the classical theory that corporate behavior is independent from other groups,scholars give a reasonable explanation for the enterprises' financialization from the perspectives of the concept of shareholder value and the decline of industrial profit.However,with the rise of behavioral economics,more and more scholars find that the industry,region and social network relationship built a platform for information exchange and resource sharing among companies,strengthen their mutual learning or imitation,and play an important role in their performance.Specifically,this phenomenon is termed as peer effect by researchers.So,does it play a vital role for the financialization of Chinese real companies? Will it lead to the stagnation of Chinese real economy and the agglomeration of systemic risks in the industrial sector?Based on the existing theoretical and empirical research,this paper attempts to explore the complex relationships between corporate financialization and peer effects from the perspectives of industry,region and director network.The research targets are mainly focused on the core aspects of the peer effects of listed companies' financialization,such as the existence,mechanisms,influencing factors,and the economic consequences.Firstly,it constructs the theoretical analysis framework for identifying the theoretical basis of this passage.Secondly,it checks the present situation of the financialization and its peer effects of Chinese listed companies.Then,by using the statistical tools and methods such as ordinary least-squares,two-stage least-squares,difference GMM,probit model,IV-probit model,spatial econometric model,complex network model,this paper systematically analyzes the existence and robustness,mechanisms and influencing factors of the peer effects of corporate financialization,and further discusses its influence on enterprises' core business and risktaking behavior through the fixed effect model and mediation effect model.Lastly,this paper puts forward relevant policy recommendations from the perspectives of government regulators and listed companies,and try to prevent risks caused by peer effects of nonfinancial companies' financialization.The main conclusions are shown as follows:Firstly,it is centered on the industry peer effects of corporate financialization.More comprehensively,the analysis proves its existence and robustness,when it eliminates the endogenous influence of the regional peer groups and the two-way causality of financialization behavior between the company and the industrial groups.When referring to the mechanisms,it holds the opinion that the opportunistic behavior caused by substitution motivation may encourage managers to imitate or follow the financial decision-making of the same industrial group.In addition,from the perspective of social learning mechanism,it shows that not the leading but the following companies intend to make financial decisions by referring the industrial groups.Especially,in the heterogeneity analysis of ownership,it proves to make an even stronger impact as a state-owned enterprise,when compared with private-owned enterprise.As for the influencing factor,financial development expressed by finance scale promotes the industry peer effects of corporate financialization.Secondly,it begins to prove the existence and robustness of region peer effects of financialization with a corporate perspective,when it eliminates the endogenous influences of the industrial peer groups and two-way causality of financialization behavior between the company and the regional groups.Moreover,the corporate financialization comes to be spatial spillover effects when it constructs the spatial weight matrix based on the administrative adjacency.And then,it demonstrates the mechanisms from the perspectives of substitution motivation and social learning.In addition,economic policy uncertainty lays negative influence on region peer effects of corporate financialization.Thirdly,it begins with the empirical test that financialization peer effects of corporate director network are proof of existence and good robustness.And then,it demonstrates the mechanisms of the core conclusion from the perspectives of substitution motivation,social learning and reputation incentive for executives.Finally,the network centralities and the executives' financial background and overconfidence can also promote the director-based network peer effects of corporate financialization.Lastly,focused on the economic consequences,the peer effect of financialization inhibits future development of real enterprises' core business,but promotes their risk-taking,both of the two opposite effects through improving corporate financialization level.In addition,it indicates that managers' imitative or following behavior is actually not irrational or blind,and further enhance enterprises' current value by improving their risk-taking.That is,under the background that the corporate long-term goal is difficult to achieve,and the short-term value is easy to improve,managers have to settle for second best,deviate from the main business development,imitate or follow the financial decision-making of the same peer groups with rationally and non-blindly attitudes,and finally seek for the corporate shortterm value maximization by improving its risk-taking,but which further aggravates the financialization risks of real economy in China.