An Analysis Of The Motivation And Performance Of Entity Enterprise Financialization From The Perspective Of Firm Life Cycle

At present,China’s economy is at a stage of rapid development,and a multi-level capital market system has been gradually established,which provides strong support for the vigorous development of the financial industry and deepens the degree of financialization of many enterprises.Many entity enterprises,driven by the capital profit motive,have begun to invest more funds in financial sector with higher capital returns in order to obtain more profits,hoping to obtain high returns through speculation.However,risks and benefits coexist,and high returns inevitably correspond to high risks.Some entity enterprises blindly invest in financial products without evaluating their ability to enter the financial sector.This may not only cause huge investment losses,but also cause the problem of excessive financialization in entity enterprises,thereby affecting macroeconomic stability.In order to explore the motivation for entity enterprises to enter the financial sector and the performance of financialization,this thesis selects Youngor,an entity enterprise with a relatively high degree of financialization,as the case study object.Then,according to the firm life cycle theory,Youngor’s life cycle is divided into three different stages.It is found that the degree of financialization at each stage varies greatly,and the motivations and effects of financialization are also different.Through the research on each stage,it is possible to analyze the problems existing in the process of enterprise financialization and propose relevant suggestions.In order to study the above issues,this thesis first sorts out relevant theories to pave the way for case analysis.Then,it collates the relevant literature on enterprise financialization,summarizes the existing achievements and conclusions,and clarifies the calculation method of enterprise financialization.There are significant differences in business strategy,production management,and corporate governance at different firm life cycle stages.Therefore,the motivation and impact of enterprise financialization at different life cycle stages are likely to be different.Based on the theory of firm life cycle,the research ideas of this thesis on enterprise financialization are clarified.Secondly,this thesis collects the financial data of Youngor from 1998 to2021,and measures the degree of Youngor’s financialization from two perspectives:financial asset and financial income.Using the cash flow patterns,the life cycle of Youngor is divided into three stages: growth,maturity,and decline.It is found that the degree of financialization of Youngor varies in different life cycle stages,but the overall trend is fluctuating and rising.Then this thesis analyzes the motivations of financialization at different life cycle stages,and finds that the motivation of financialization at the growth stage is to achieve diversified operations and diversify business risks.The motivation of financialization in the maturity stage is to respond to fierce competition in the industry,while being attracted by the high returns of the financial sector.During the decline period,Youngor reflected on the harm of excessive financialization and adjusted his investment strategy in order to achieve the goal of maximizing the company’s value.Then,the thesis uses traditional financial indicator analysis and EVA methods to study Youngor’s financial performance,and uses Z-score model to analyze the impact of Youngor’s financialization strategy on financial risk.Finally,the thesis puts forward relevant suggestions for the financialization of entity enterprises from the perspective of the two subjects of enterprise and government.