A Study Of The Impact Of Relational Supply Chain Transactions On Corporate Financialisation

As China’s demographic dividend and the government-led investment dividend gradually disappear,the profits of real enterprises are decreasing,and more real enterprises are investing their capital in the financial sector,which has a higher return on investment,resulting in a tendency for both macroeconomic and micro enterprises to have more financial assets.The literature has shown that relational supply chain transactions have a significant impact on R&D investment and cash holdings,all of which influence financial investment.This paper therefore examines the impact of the phenomenon of relationship-based transactions,which is prevalent among Chinese companies,on the financialisation of real companies at different stages.The existing literature suggests that the research perspective on relational transactions should be in the opposite direction of the two effects.When relational transactions manifest themselves as relational capital effects,they provide an incentive for firms to operate better.Suppliers or customers will monitor the firm’s production and operations,so the firm will invest more resources in production equipment,technological innovation and other physical industries,but the firm’s resources are limited and it lacks the extra resources to make financial investments.When relationship-based transactions manifest themselves as a risk effect,a firm’s operational and cash flow risks are significantly increased,management increases its risk expectations of the firm and,in pursuit of its own interests,increases its financial investments based on precautionary savings motives,as well as engaging in corporate financialisation behaviour motivated by the pursuit of short-term profits and surplus management.Therefore,how relationship-based trading affects corporate financialisation needs to be further tested.Using A-share listed companies on the Shanghai and Shenzhen stock exchanges from2010 to 2021 as the research sample,this paper conducted a multiple regression analysis and found that,firstly,the impact of supply chain relationship-based transactions on the financialisation of firms is positive U-shaped.Secondly,agency costs play a mediating role in the impact of relationship-based transactions on the financialisation of firms.Third,the positive U-shaped curve of supply chain relationship-based transactions and financialisation of real firms is negatively moderated by corporate social responsibility,which flattens the curve.This paper further analyses heterogeneity based on the nature of property rights and the degree of market competition,and finds that the positive U-shaped relationship between relationship-based transactions and corporate financialisation is more significant in non-state enterprises and enterprises with more competitive markets.This paper examines the relationship between the financialisation of firms based on the dual effect of relationship-based transactions in the supply chain,which can help firms to examine the dual effect of their relationship-based transactions and prevent Over-financialization.