Research On The Impact Of Financial Asset Investment On Enterprise Value

Under the background of the new economic,China's entity enterprises face the challenge of maximizing the value of the company: on the one hand,they are under pressure to overcapacity in the manufacturing industry and the decline in net profit.On the one hand,they must find a new path for upgrading and transformation of enterprises.And at the same time,they are also threatened by international trade protectionism.The real economy has shown a downward trend in recent years,while the financial industry and the real estate industry have performed very prosperously.Under the motive of capital,the number of financial assets held by entities has grown rapidly.This kind of “de-reality” behavior will affect The value creation of the enterprise.Promoting enterprise upgrading and encouraging entity enterprises to establish themselves in the main business is an important strategic requirement of China.It is of great significance to study whether the behavior of entity enterprises to invest financial asset can promote the value of the company.Based on the micro perspective of the enterprise level,this paper analyzes the impact mechanism of the financial assets investment of the entity on the enterprise value from the perspectives of “reservoir effect” and “substitution effect”: The transformation of surplus funds into financial assets by the entity can reduce the invalid investment of the enterprise in the surplus industry,which can improve the investment efficiency,and facilitate the upgrading and transformation of the enterprise.At the same time,it will make the enterprise excessively pursue short-term financial benefits and reduce the investment on the fixed assets and the innovations payment.From the empirical research on the sample of non-finance and non-real estate listed companies in China from 2007 to 2016,this paper finds that there is an inverted U-type nonlinear relationship between financial asset investment and company value,the “substitution effect” of financial asset investment has already occur in China.Besides,the inverted U-type impact on the company's value is mainly reflected in transactional financial assets and real estate investment.The financial institution's equity investment has a positive linear relationship with the company's value.But,the impact of emerging financial assets such as bank wealth management and trust products on company value is not significant.Based on the research results,this paper proposes that the entity should rationally allocate financial assets when making investment decisions.The ratio of too high or too low is not conducive to the improvement of the company's value.At the same time,it should choose the types of financial assets that are conducive to the future development.For the regulatory authorities,it should actively guide funds into the entity sector and regulate the financial investment behavior of the entity.