Research On The Impact Of Institution Site Visits On Corporate Financialization

The provision of financial services to the real sector is the fundamental link between the two industries.As non-financial firms increasingly allocate financial assets,China’s economy has tended to shift from the real to the hypothetical in recent years.Little research has been done on corporate financialization from a micro perspective,and the majority of the literature on the subject has been on internal governance at the macro level.The effect of institutional field research on corporate financial asset allocation decisions has not been researched despite being a significant external governance instrument.Theoretically,the traditional literature has found that institutional field research is a form of information mining,where face-to-face communication reveals more information about the firm,and that institutional field research may mitigate corporate information asymmetries and improve corporate governance,thereby alleviating corporate financing constraints and discouraging firms’ savings incentives to allocate financial assets,and may mitigate principal-agent problems through direct monitoring mechanisms,discouraging firms’ financial asset allocation.Both incentives will be suppressed,and so will the financialization of firms.In order to determine the effects of institutional field research on corporate financialization,this study used unbalanced panel data from Shenzhen A-share listed businesses between 2013 and 2021.The findings demonstrate that institutional field research considerably lowers company financialization by easing financing restrictions and deterring businesses from choosing how to allocate their financial assets.Institutional research has a stronger deterrent effect on financialization in businesses with larger information asymmetry,worse corporate governance,and private businesses with higher financing constraints.Additionally,the study found that institutional research helps to reduce corporate underinvestment,providing further evidence of its dampening effect on financialization.These findings remained consistent across various methodological approaches and variable replacements.The study also discovered that institutional research has a stronger monitoring effect on overconfident management,leading to a more pronounced inhibitory effect on financialization.(1)From the standpoint of external corporate governance,we find that financial institutions’ proactive information mining behavior can reduce the phenomenon of corporate financialization,offering a theoretical benchmark for micro governance mechanisms to lessen corporate de-realization.(2)It contributes to the body of knowledge regarding the function of corporate governance in financial institutions.The research in this paper shows that financial institutions can also produce information,improve corporate governance,and stop corporate financialization through such proactive information mining behaviors as research,which is an important addition to the relevant literature.Traditional literature has more frequently discussed the governance role of shareholder activism by institutional investors through their shareholdings and other behaviors.(3)The research presented in this work broadens the research perspective on corporate financialization-related concerns.The research presented in this paper further demonstrates that capital markets do have an impact on company decision-making,which is consistent with earlier literature.As a result,both academics and policymakers may talk about how to reduce corporate definancialization from the standpoint of the micro governance system of capital markets.