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Peer effects in corporate financialization: The role of Fintech in financial decision making

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  • Zhang, Haolin
  • Feng, Yongqi
  • Wang, Ying
  • Ni, Juan

Abstract

This paper develops a three-period theoretical model of corporate investment decision-making to illustrate the impact of peer effects on corporate financialization and the influence of Fintech on peer effects in corporate financialization. To empirically examine the framework, we utilize 27,697 firm-year observations from Chinese A-share listed companies between 2011 and 2021 in a panel data setting. Findings show that there is a significant and positive relationship between the degree of corporate financialization and peer effects. In addition, Fintech can mitigate the ‘peer effects’ of corporate financialization among companies located in the same geographic region, regardless of their industrial affiliation. We further demonstrate that companies' perceptions of uncertainty arising from market competition, regulatory policy, monetary policy, and fiscal policy are important mechanisms for the peer effect of corporate financialization and the influence of Fintech on peer effects in corporate financialization. Our results remain qualitatively consistent after conducting a set of robustness checks.

Suggested Citation

  • Zhang, Haolin & Feng, Yongqi & Wang, Ying & Ni, Juan, 2024. "Peer effects in corporate financialization: The role of Fintech in financial decision making," International Review of Financial Analysis, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:finana:v:94:y:2024:i:c:s1057521924001996
    DOI: 10.1016/j.irfa.2024.103267
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    More about this item

    Keywords

    Corporate financialization; Peer effects; Fintech; Perception of uncertainty; Behavioral economics; High-quality development of corporate;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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