Regional Green Development and Corporate Financialization: A Quasi-Natural Experiment on the Ecological Conservation and High-Quality Development of the Yellow River Basin

Xiangyang Li, Guochao Liu (), Yufei Zhao, Yanhan Sun and Jianluan Guo
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Xiangyang Li: School of Government, Central University of Finance and Economics, Beijing 100081, China
Guochao Liu: School of Business, Central University of Finance and Economics, Beijing 100081, China
Yufei Zhao: Wealth Management Department, China Securities Company Limited, Beijing 100020, China
Yanhan Sun: School of Business and Administration, Shandong University of Finance and Economics, Jinan 250014, China
Jianluan Guo: School of Business, Central University of Finance and Economics, Beijing 100081, China

Sustainability, 2024, vol. 16, issue 11, 1-19

Abstract: The implementation of the Ecological Conservation and High-Quality Development of the Yellow River Basin (YBCD) can provide the institutional context for economic outcomes of environmental regulations and influences on corporate financial asset allocation. The basic objective of this study is to examine the impact of the YBCD on corporate financialization, analyzing the influencing mechanisms and heterogeneity. Using the data of A-share listed companies spanning 2015 to 2022 in China, this study employs the differences-in-differences method to investigate the impact of the YBCD on corporate financialization. The findings reveal that (1) the YBCD could significantly inhibit corporate financialization and suppress financial asset allocation driven by arbitrage motivation. It will help corporate financial asset allocation shift towards physical businesses, emphasizing long-term development. (2) The YBCD could inhibit corporate financialization by reducing corporate agency costs and fostering environmental, social, and governance (ESG), leading to crowding-out effects on financial assets. (3) The heterogeneity analysis indicates that the YBCD could generate significant inhibitory effects on corporate financialization in non-state-owned enterprises, high-polluting companies, and companies located in regions with stronger environmental regulations.

Keywords: Yellow River Basin; corporate financialization; agency cost; ESG; differences-in-differences (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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