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

Mingjun Deng, Xusheng Fang, Qinke Lyu and Wenbing Luo

Economic Research-Ekonomska Istraživanja, 2023, vol. 36, issue 3, 1-21

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.

Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/1331677X.2023.2165526 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:reroxx:v:36:y:2023:i:3:p:1-21

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rero20

DOI: 10.1080/1331677X.2023.2165526

Access Statistics for this article

Economic Research-Ekonomska Istraživanja is currently edited by Marinko Skare

More articles in Economic Research-Ekonomska Istraživanja from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().