Does managerial myopia promote enterprises over-financialization? Evidence from listed firms in China

Yanchi Chen, Ju Ye and Qi Shi

PLOS ONE, 2024, vol. 19, issue 9, 1-18

Abstract: This paper analyzes the potential shortsightedness of enterprise managers through annual reports. Additionally, we use corporate financial statement data to measure enterprises over-financialization in terms of resource allocation. After testing with a causal inference model, we find that firms with managerial myopia significantly contribute to over-financialization. It remains robust even after the instrumental variable of whether the manager has experienced a famine is used. Furthermore, financial distress and financing constraints amplify the inclination of short-term-focused managers to amass greater financial assets.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0309140

DOI: 10.1371/journal.pone.0309140

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