Research On The Crowding-out Effect Of Financial Investment:Evidence From Listed Companies In China

The Chinese economy has entered a new normal stage.Under the background of "integration of industry and finance" and economic transformation,listed companies have actively invested in financial capital such as stocks and bonds.However,the trend of financialization of listed companies in non-financial entities has become more and more apparent and fierce.The imbalance between financial investment and entity investment has become an increasingly prominent problem.Driven by the excessive return on financial investment,many companies allocate large amounts of resources to the financial filed for investment arbitrage.However,the investment income of financial investment may not necessarily feed back the main business,but affect the company's Main business development and physical investment behavior.In the case of limited capital resources,too much financial investment will inevitably occupy the capital of entity investment,and financial investment has a crowding-out effect on entity investment.Considering the impact of corporate financial investment on entity investment,combined with the internal control of internal governance mechanism and the external competition mechanism market competition,this paper attempts to explore whether the financial investment will lead to the entity investment crowding-out,whether the crowding-out effect is different under the different property rights,regional marketization degree and industry classification,and looking for a mechanism to restrain this effect.Based on the principal-agent theory,behavioral finance theory,resource-based theory and congestion of production factors theory,this paper takes a sample of 1474A-share listed companies in China from 2009 to 2017,and builds the empirical models.We draws the following conclusions:(1)The financial investment of the company negatively affects the entity investment,because of the heterogeneity of capital resources and the differences of managers' investment preferences for differenttypes of capital,financial investment has a crowding-out effect on entity investment.The higher the level of financial investment,the more serious the crowding-out effect to entity investment is.Short-term financial investment and real estate financial investment have a much stronger squeeze on entity investment than the long-term financial investment.(2)The company's financial investment has a significant difference in the degree of marketization of entity investment in different regions.Compared with the regions with relatively high degree of marketization,the financial investment is lower in the less marketized regions.However,there is no significant difference between state-owned listed companies and non-state-owned listed companies,manufacturing listed companies and non-manufacturing listed companies.(3)Internal control and market competition have a restraining effect on the investment crowding-out effect caused by the company's excessive financial investment.Internal control plays a significant role in restraining the investment crowding-out caused by real estate financial investment,while market competition suppresses short-term financial investment crowding-out.(4)The crowding-out effect will have an negative impact on the company's performance,it will detract from the company's value.From the microscopic point of view,this paper analyzes the crowding-out effect of financial investment,and provides new evidence for the company's capital allocation and non-efficiency investment behavior interpretation paradigm.The research results show that the entity companies allocate financial assets for arbitrage and speculative motives,and the excessive financial investment also occupies the entity investment capital,which ultimately reduces the company's operating efficiency.In addition,this paper combines the company's internal control and market competition to explore the main transmission mechanism that inhibits the company's investment crowding-out,and enriches and develops the research on corporate governance and listed company investment behavior.The conclusions of this paper will help to explain more comprehensive and dynamic causes of the formation of the investment crowding-out effect,and help to clarify the relationship between the financial investment and the entity investment.It can help listed companies seek self-development and create new growth points.