Gambling preference and entity corporate financialization: evidence from China

Jingjing Zuo, Zhuming Guo, Baoyin Qiu and Huili Xie

Applied Economics, 2024, vol. 56, issue 38, 4544-4562

Abstract: We use a sample of Chinese firms to examine the impact of local gambling preference on corporate financialization. Our findings suggest that when a firm is located in a region with stronger gambling preference, it commits more corporate financialization. Specifically, strong opportunism and high risk-taking ability are the main mechanisms. In addition, we provide evidence based on gambling psychology that ‘house money effect’ and ‘break-even effect’ strengthen the positive relationship between gambling preference and entity corporate financialization.

Date: 2024
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DOI: 10.1080/00036846.2023.2212967

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