IDEAS home Printed from https://ideas.repec.org/a/taf/rcjaxx/v9y2021i3p383-407.html
   My bibliography  Save this article

Financial background of controlling shareholder and corporate financialization

Author

Listed:
  • Xiangyan Shi
  • Danlu Bu
  • Caihong Wen
  • Zong Lan

Abstract

This paper studies the effect of the controlling shareholder’s financial background on the corporate financialization. We find that controlling shareholder’s financial background has a significant positive impact on corporate financialization, and the positive impact is more obvious in credit advantage firms and firms with poor institutional environment and real investment environment. Firms with financial controlling shareholders will increase long-term value reserving financial investment, and firms’ financialization trend with lower financing constraints is more sensitive to controlling shareholders’ financial background, suggesting that speculating is the essential motivation of firms’ financialization, rather than precautionary saving. The mechanism test shows that controlling shareholder’s financial background mainly promotes corporate financialization by increasing the financial long-term equity investments at the parent company level. Finally, there is an inverted U relationship between corporate financialization and investment efficiency, and the marginal effect of corporate financialization on investment efficiency is greater in firms with financial shareholders.

Suggested Citation

  • Xiangyan Shi & Danlu Bu & Caihong Wen & Zong Lan, 2021. "Financial background of controlling shareholder and corporate financialization," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 9(3), pages 383-407, July.
    • Handle: RePEc:taf:rcjaxx:v:9:y:2021:i:3:p:383-407
    DOI: 10.1080/21697213.2021.2009177
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/21697213.2021.2009177
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/21697213.2021.2009177?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. Shangkun Liang & Weizhi Xue & Dan Yang, 2024. "Can government supervision alleviate the deviation of enterprises from the real economy to the financial sector: Evidence from China," Economics and Politics, Wiley Blackwell, vol. 36(2), pages 989-1019, July.
    2. Chen, Yueyan & Shen, Baohua & Cao, Yawei & Wang, Shuyu, 2024. "CEO social capital, financing constraints and corporate financialisation: Evidence from Chinese listed companies," Finance Research Letters, Elsevier, vol. 60(C).

    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:taf:rcjaxx:v:9:y:2021:i:3:p:383-407. 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/rcja .

    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.