The Impact Of Corporate Financialization On Financial Risks

Since the reform of the market economy,the financial and real estate sectors have taken advantage of the "east wind" to develop rapidly,and the influx of financial assets has brought great vitality to the economy.This phenomenon is not only reflected in financial enterprises,many real enterprises are drawn to financial assets due to their potential for high returns and have begun to set up financial assets on their balance sheets,which inevitably leads to some real enterprises out of "speculative" motives,unilaterally pursuing short-term interests and neglecting their main business objectives.This inevitably leads to some real enterprises pursuing short-term interests out of "speculative" motives,neglecting the main business of the enterprise,resulting in the development of the enterprise becoming more and more detached from the original track and pursuing the huge profits brought by financialisation,This will undoubtedly raise the financial risks for the enterprise and impede its long-term growth.In the context of the new normal and exploring the effects of corporate financialisation on promoting the growth of the real economy.on corporate financial risks and further exploring the moderating effect of management capabilities between the two is conducive to revealing the economic consequences that corporate financialisation can cause,and also offers a relevant point of reference for state departments to develop rational policies.and for corporate executives to seek reasonable corporate planning.This article employs both theoretical exposition and empirical investigation to examine the impact mechanism of corporate financialization on financial risk,drawing on theories such as principal-agent theory,virtual capital theory,financial asset portfolio theory,and top management team theory,and further explores the moderating effect of corporate management capability,so as to further explore the inner mechanism of the two.Relying on the influence mechanisms of corporate financialisation and management capability on financial risk,corresponding research hypotheses are proposed and multiple regression models are established.A total of 19,910 observations of 1991 eligible.The study focused on A-share listed companies between 2011 and 2020 and conducted relevant empirical tests.The findings revealed that:(1)a rise in short-term financial investment holdings can decrease the financial risk of the company in the present period,but an increase in management capability is unlikely to reduce financial risk and has no significant impact on reducing financial risk in the next period;(2)an increase in longterm financial investment holdings can elevate financial risk in both the current and next periods,and management capability has a positive moderating effect.(3)Enterprises with strong management capabilities are more confident in their own investment behavior and tend to invest in long-term financial assets.(4)From the perspectives of factor density,regional distribution and property rights nature,the mechanism of enterprise financialization on financial risk was compared,and the moderating effect of management capacity was more significant in labor-intensive enterprises,enterprises in the central region and state-owned enterprises.(5)On this basis,we further quantify the threshold value of the non-linear moderating effect and the degree of influence,and conduct corresponding research through threshold regression models to study the underlying mechanism of the difference in the role of management capability on investment in financial assets for different cycles,so as to provide corresponding reference for managers.Through the results of the empirical analysis,this paper proposes how to weigh the pros and cons of financialisation and financial risk for companies of different nature,and proposes corresponding countermeasures from the perspective of government incentives for R&D and increased regulation of speculative behaviour.The novelty of this paper lies in its empirical investigation of the theoretical mechanism of "top management team",which fully demonstrates the key role played by senior management in corporate development.The moderating effect of management capability is used to investigate the mechanism of financial risk inherent in corporate financialisation,which has rarely been mentioned in the literature.