A Study Of The Impact Of Corporate Financialization On M&A Decisions

As the real economy faces the challenges of capacity elimination and industrial upgrading,the booming financial market has started to attract "confused" real capital to take the path of enterprise financialization.Given the positioning of financial instruments to serve the real economy,whether enterprises engaged in real business can still keep their original intention of purchasing financial products,financial contracts and even cross-border investment in real estate,with business operations as the main focus and financial investment as a supplement,has become one of the keys to the sustainability of China’s economy.Whether financial products invested by enterprises serve real investment through the pooling effect or exclude real investment through the crowding out effect has become a valuable research topic in the academic field.In the existing literature,scholars’ research on the impact of enterprises’ financialization behavior on investment is mostly limited to physical capital investment,and little literature has included M&A investment in the research framework of enterprises’ financialization behavior.Based on the above analysis,this paper conducts the following studies: firstly,we analyze the direction of corporate financialization behavior affecting M&A investment propensity from two levels: capital pooling effect and crowding out effect;secondly,we explore the transmission path of corporate financialization level affecting M&A propensity from two perspectives: financing constraints and operating profitability;finally,we analyze the heterogeneity of corporate financialization affecting M&A propensity from two levels: property rights nature and enterprise size.Finally,the heterogeneity of the impact of corporate financialization on M&A propensity is analyzed at the levels of property rights and firm size.This paper conducts an empirical study on the above issues using the Logit model and Poisson model from 2015 to 2021 as the research sample of China’s A-share listed companies in non-financial industries.The main findings include(1)there is a significant inverted U-shaped relationship between corporate financialization and M&A propensity,in which a moderate increase in corporate financialization can promote corporate M&A investment,while an excessive increase in financialization will inhibit corporate propensity to initiate M&A;(2)under the premise of moderate financialization,corporate financialization alleviates financing constraints through the pooling effect,which in turn positively affects M&A propensity;under the premise of excessive financial(2)under the premise of moderate financialization,corporate financialization reduces the financing constraint through the crowding-out effect,which in turn negatively affects the propensity to initiate M&A;(3)the inhibitory effect of financialization level on the propensity to initiate M&A is more pronounced among non-SOEs and small firms.The contributions of this paper are:(1)it enriches the research related to corporate financialization,and the inverted U-shaped findings break the previous more negative impressions of corporate financialization behavior and give more plasticity to corporate financialization behavior.(2)Through the mechanism analysis and heterogeneity analysis of the impact of corporate financialization on M&A propensity,it highlights the financing constraints faced by SMEs and non-state enterprises,and provides a reference value for the government on how to establish more effective credit policies to help the development of micro and small enterprises.