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Investment risk, return gap, and financialization of non-listed non-financial firms in China⁎

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  • Tang, Huoqing
  • Zhang, Chengsi

Abstract

This paper constructs a portfolio choice model allowing risks in both fixed and financial investments to capture non-financial firms' financialization behavior. Using firm-level panel data from non-listed non-financial firms in China over the period from 1998 to 2009, we find that relatively risk in fixed investment and rates of return gap between financial and fixed investments play significant roles in financialization behavior for the whole sample firms. Further group-division analysis based on firms' ownership and operating conditions reveal discrepancies between state-owned and private firms and between well-operated and insolvent firms.

Suggested Citation

  • Tang, Huoqing & Zhang, Chengsi, 2019. "Investment risk, return gap, and financialization of non-listed non-financial firms in China⁎," Pacific-Basin Finance Journal, Elsevier, vol. 58(C).
    • Handle: RePEc:eee:pacfin:v:58:y:2019:i:c:s0927538x19301313
    DOI: 10.1016/j.pacfin.2019.101213
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    Cited by:

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    7. Wu, Kai & Lu, Yufei, 2023. "Corporate digital transformation and financialization: Evidence from Chinese listed firms," Finance Research Letters, Elsevier, vol. 57(C).
    8. Hou, Qingsong & Tang, Xiaofang & Teng, Min, 2021. "Labor costs and financialization of real sectors in emerging markets," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    9. Ximeng Jia & Chen Chen & Yaoqin Li & Mengyu Hao, 2023. "From childhood poverty to good boss: the impact of CEO's early-life experience on corporate employee responsibility," Asian Business & Management, Palgrave Macmillan, vol. 22(5), pages 1937-1961, November.
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    More about this item

    Keywords

    Financialization; Investment risks; Non-listed firms; China;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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