IDEAS home Printed from https://ideas.repec.org/a/taf/reroxx/v36y2023i3p1-21.html
   My bibliography  Save this article

How does corporate financialization affect operational risk? Evidence from Chinese listed companies

Author

Listed:
  • Mingjun Deng
  • Xusheng Fang
  • Qinke Lyu
  • Wenbing Luo

Abstract

Using a sample of China’s non-financial listed companies from 2009 to 2020, this paper examines the impact of corporate financialization on operational risk. Our results show that there is a positive relationship between corporate financialization and operational risk, indicating that the risk amplification effect of corporate financialization is dominant, and this effect is more pronounced among companies with higher financing constraints. The analysis of the impact mechanism shows that corporate financialization fails to alleviate underinvestment by means of capital ‘reservoir’, but will lead to an increase in operational risk by damaging the profitability of the company’s main business. In addition, we find that product market competition mitigates the risk amplification effect of corporate financialization. The conclusions of this paper have certain significance for the government and corporations to understand the microeconomic consequences of financialization.

Suggested Citation

  • Mingjun Deng & Xusheng Fang & Qinke Lyu & Wenbing Luo, 2023. "How does corporate financialization affect operational risk? Evidence from Chinese listed companies," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 36(3), pages 1-21, December.
    • Handle: RePEc:taf:reroxx:v:36:y:2023:i:3:p:1-21
    DOI: 10.1080/1331677X.2023.2165526
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1331677X.2023.2165526
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1331677X.2023.2165526?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. Ju, Chunhua & Fang, Xusheng & Shen, Zhonghua, 2024. "Investor attention and corporate financialization: Evidence from internet search volume," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    2. Roy, Tonoy & Bhuiyan, Rubaiyat Ahsan & Ahmed, Sarwar Uddin & Abdullah, Mohammad, 2024. "Geopolitical conflict and firm bankruptcy risk," Finance Research Letters, Elsevier, vol. 68(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:reroxx:v:36:y:2023:i:3:p:1-21. 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/rero .

    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.