A Study On The Motivation And Mechanisms Of Corporate Financialization From The Perspective Of Managerial Ability

In recent years,the problem of overcapacity in China’s enterprises has become increasingly prominent with the economic development.The sluggish rate of return on investment in the real economy has led enterprises to reduce their investment in industry and instead invest their capital in the booming financial market in order to seek a higher rate of return on investment.In the process of enterprise financialization,the manager,as the actual controller and executor of the enterprise,undoubtedly plays a key role.Managers determine the direction and scale of investment.High level managers can effectively use enterprise funds to maximize investment efficiency;However,low level managers may make investment decisions that are not conducive to the long-term development of the enterprise out of selfish motives.Therefore,it is of great significance to consider the influence of managers in the research related to enterprise financialization.This paper explores the motivation behind enterprise financialization from the perspective of managerial ability,as well as the possible regulatory and intermediary effects.First of all,this paper selects the financial data of listed companies in the Ashare market from 2010 to 2021,uses the DEA Tobit model proposed by Dermerjian et al.Secondly,this paper divides financial assets into long-term and short-term according to term structure,and studies the allocation motivation of financial assets under different term structures.In addition,this paper also takes the uncertainty of monetary policy and economic policy as the adjusting variable,and analyzes the regulatory effect of different macroeconomic environments on the enterprise’s financial motivation.Finally,this paper uses the intermediary effect model to further explore the impact mechanism of agency problem on corporate financialization from the perspectives of free cash flow,corporate governance and equity incentive.The empirical results of this paper show that:(1)Chinese enterprises mainly allocate financial assets with the motivation of "substitution effect".And it is still stable after distinguishing the term structures of different financial assets.(2)In the case of tight monetary policy and high uncertainty of economic policy,the agency problem faced by enterprises will be alleviated,thus reducing the negative correlation between managerial ability and enterprise financialization.(3)Low level managers will improve the level of free cash flow of enterprises,and then allocate more financial assets with the motivation of "substitution effect";At the same time,low-level managers will also tend to increase their own control rights,improve the degree of separation of the two rights,and facilitate their investment in financial assets with the characteristics of "substitution effect";Finally,high-level managers will get more shares of the enterprise,alleviate the agency problem faced by the enterprise,and then reduce the investment in financial assets under the "substitution effect".The significance of this paper is to verify the motivation behind enterprise financialization from a new perspective-the ability of managers.In addition,the motivation behind financial assets with different term structures is not consistent,which enriches the existing research results to a certain extent.At the same time,this paper also considers the impact of macroeconomic environment on managers’ allocation of financial assets,which provides a reference for macroeconomic policy makers.Finally,this paper explores the transmission mechanism between managers’ capabilities and financial asset allocation,which provides important evidence support for the research on the "substitution effect" motivation of financial asset allocation of enterprises.