IDEAS home Printed from https://ideas.repec.org/a/mes/emfitr/v58y2022i7p1913-1924.html
   My bibliography  Save this article

Does Financialization of Non-Financial Corporations Promote or Prohibit Corporate Risk-Taking?

Author

Listed:
  • Jinghua Wang
  • Ning Mao

Abstract

We investigate how the financialization of nonfinancial corporations (NFCs) affects corporate risk-taking. We find that NFCs’ financialization has an adverse effect on corporate risk-taking, supporting the “crowding-out” effect. Short-term financial investments undermine firms’ incentives to chase risky but profitable investment projects. The negative association between NFCs’ financialization and corporate risk-taking is more pronounced in state-owned enterprises and firms with lower institutional ownership, showing that financialization leads managers to become more myopic and reduce long-term investments. Further, the sensitivity of financialization and corporate risk-taking varies with financial asset classification. We address both selection and endogeneity concerns.

Suggested Citation

  • Jinghua Wang & Ning Mao, 2022. "Does Financialization of Non-Financial Corporations Promote or Prohibit Corporate Risk-Taking?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(7), pages 1913-1924, May.
    • Handle: RePEc:mes:emfitr:v:58:y:2022:i:7:p:1913-1924
    DOI: 10.1080/1540496X.2021.1944853
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1540496X.2021.1944853
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1540496X.2021.1944853?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liu, Xiaotong & Wang, Jingda & Cao, Chang, 2024. "Mutual fund cliques, fund flow-performance sensitivity, and stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 91(C).
    2. Xie, Hongji & Tian, Cunzhi & Pang, Fangying, 2024. "Venture capital and corporate financialization: Evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 93(C), pages 119-136.
    3. Guo, Chong & Jiang, Yalin & Yu, Fang & Wu, Yingyu, 2023. "Does environmental information disclosure promote or prohibit financialization of non-financial firms? Evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 92(C), pages 200-214.
    4. Guo, Fenghua & Huo, Peiyun & Song, Hui & Zhang, Duolei & Zhou, Lei, 2024. "Does tax symmetry improve corporate innovation investment? Evidence from the change policy of loss carrying forward period in China," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 591-602.
    5. Shuanglian Chen & Benhuan Nie & Xiaohua Huang, 2024. "Nonlinear Impact of Corporate Financialization on Sustainable Development Ability: Evidence from Listed Companies in China," Sustainability, MDPI, vol. 16(8), pages 1-23, April.
    6. Yongxia Wu & Haiqing Hu & Xianzhu Wang, 2024. "Commercial Credit Financing and Corporate Risk-Taking: Inhibiting or Facilitative?," Sustainability, MDPI, vol. 16(16), pages 1-22, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:emfitr:v:58:y:2022:i:7:p:1913-1924. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MREE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.