The Financialization Of Non-financial Enterprises And The Risk Of Stock Price Collapse

In recent years,the real economy of our country has been affected by the international situation and the profit level has declined.This has led to increased operational pressure on real enterprises.At the same time,the status of the financial industry in the national economy is constantly improving,the development of the financial industry is gradually accelerated,with a larger profit space,which prompts many entities to start to get closer to the financial industry.Blindly following the trend of investment in financial assets will not only occupy funds,investment efficiency is low,but also deviate from the main business development,aggravate enterprise risks,and ultimately damage enterprise value and aggravate the risk of stock price crash.Therefore,the study on the influence of financialization of nonfinancial enterprises on stock price crash risk,and whether institutional investors’ participation in shareholding and the financial background of senior executives will have a regulating effect on the relationship between the two,will provide useful reference for Chinese non-financial enterprises to invest in financial assets,effectively alleviate the pressure of enterprises,realize transformation and upgrading,and finally realize the positive interaction between the real economy and the virtual economy.This paper selects panel data of 3,705 non-financial listed enterprises in China from 2010 to 2021 as research samples,uses the method of combining literature research and empirical research to investigate the influence of the degree of financialization of entity enterprises on the risk of stock price crash and the mechanism of action,and examines the moderating effects of institutional shareholding ratio and senior executives’ financial background.This paper reviews the literature on the financialization of non-financial enterprises,the risk of stock price collapse,the participation of institutional investors in stock ownership,and the financial background of senior executives.On the basis of literature review,theoretical analysis is carried out,and the research hypothesis of this paper is proposed.First,financialization has two effects on stock price crash risk."Reservoir" effect: reserve liquidity,investment income improve corporate financial status,improve the investment efficiency of idle funds,introduce external supervision,and thus help reduce the risk of stock price collapse."Crowding out" effect: deviates from the main business,conceals negative news,reduces corporate cash flow,intensifies systemic risks,and ultimately intensifies the risk of stock price collapse.Therefore,the relative strength of "reservoir" effect and "crowding out" effect will ultimately determine the impact of financialization on stock price crash risk.In addition,if the financialization of non-financial enterprises is reflected as helping to reduce the risk of stock price crash,then according to the "reservoir" effect,financialization can reduce the risk of stock price crash by reducing the degree of corporate earnings management.Second,the participation of institutional investors in shareholding has both positive and negative impacts on corporate governance.Therefore,the participation of institutional investors in shareholding may influence the relative strength of the "reservoir" effect and the "crowding out" effect,thus affecting the enterprise value and ultimately affecting the stock price volatility.Third,the financial background of senior executives has a positive effect on corporate governance.Therefore,the financial background of senior executives is likely to enhance the "reservoir" effect,thereby improving the business conditions of enterprises and strengthening the restraining effect of financialization on the risk of stock price crash.Then,the model was set up for regression analysis to test the research hypothesis.Finally,on this basis,various methods are used to verify the stability of the empirical research,so as to ensure the reliability and stability of the empirical analysis.This paper draws the following conclusions: First,with other conditions basically unchanged,there is a negative correlation between the degree of financialization of non-financial enterprises and the risk of stock price crash,that is,the more financialized the enterprise,the lower the risk of stock price crash.In addition,corporate financialization will reduce the degree of earnings management,thus reducing the risk of stock price crash.Second,other conditions being basically equal,institutional investors’ ownership of shares will enhance the role of financialization of real enterprises in suppressing the risk of stock price collapse.Third,other conditions being basically equal,the financial background of senior executives will enhance the role of the financialization of real enterprises in restraining the risk of stock price collapse.This paper connects the two research hot spots of non-financial enterprise financialization and stock price crash risk,expands the research perspective,and introduces the regulating effect of institutional investor shareholding and senior executives’ financial background on the relationship between them.The conclusions of this paper enrich the existing literature and provide a basis for the formulation of effective policies.First,non-financial enterprises should actively learn financial products,financial markets and other related knowledge,pay attention to the cultivation of internal professionals,and establish supporting systems.Second,nonfinancial enterprises should make reasonable investment decisions based on their own development needs.Third,by constantly optimizing the corporate ownership structure,actively cultivating diversified institutional investors,strengthening the supervision over institutional shareholders,and guiding institutional shareholders to fully play an active role in corporate governance.Fourthly,enterprises should attach importance to their past working experience,professional background and other characteristics when building senior management team.The research results of this paper have positive practical significance for Chinese entity enterprises to optimize asset allocation and improve corporate governance mechanism.