Research On The Motivation And Financial Influence Of Financialization Of Listed Companies In Automobile Manufacturing Industry

The report of the 19 th National Congress of the Communist Party of China in 2017 pointed out that “China’s economy has changed from a stage of high-speed growth to a stage of high-quality development ”.The real economy has entered a stage of high-quality development and the high quality development requires the real enterprises to “move away from the virtual to the real ” and focuses on the development of the main business.The prosperous development of the financial market has made a great difference to different areas.It has enabled most enterprises to invest in the financial industry and obtain economic benefits.When enterprises allocate financial assets reasonably and invest appropriately in the financial field,they can not only obtain corresponding economic returns to supplement the development of their main business,but also promote the development of the financial industry and promote the overall improvement of the domestic economy.However,when the real enterprises invest of a large amount of capital in the financial market and gradually detach from their main business,it will hinder the development of their core technology industries and lead to insufficient development power of their own main business.The report of the 20 th Party Congress pointed out that we should deepen the reform of the financial system,adhere to the focus of economic development on the real economy,promote a new type of industrialization,and prevent enterprises from “moving away from the real to the virtual”.This paper takes Company H,which has a significant financialization in the automotive manufacturing industry,as the research object.Case study and comparative analysis methods are used to explore the motivations and financial impacts of H Company’s financialization.First,I define financialization and financial impact,review the document of financialization motives and financial impact,and describe the concepts and theories related to financialization and financial impact.Next,I introduce the financial asset allocation and returns of the automobile manufacturing industry.and then introduce the financialization history of Company H in the past 13 years.Next,I analyze the motivation of financialization of H companie from both external and internal motivation perspectives.Explore the financial impact of the financialization of Company H from both vertical and horizontal perspectives,analyzing accounting indicators of A profitability,Operational capabiliy,Solvency and Development ability and accounting indicators of Econonic Value Added.The study found that the external motivation of financialization of Company H was influenced by the economic situation,and the internal motivation was that the main business income was not stable enough.Company H has invested too many resources in the capital market and excessive financialization has had a less-than-optimistic financial impact on the company,as reflected in the decline in its A profitability,Operational capabiliy,Solvency,Development ability,as well as the lack of Econonic Value Added..Over-holding of financial assets inhibits the development of the company’s main business.However,in recent years,H is aware of the negative impact of too many financial assets,so it is gradually optimizing its financial asset structure.Through the case study,I can provide some suggestions: The government needs to provide proper guidance to enterprises,reduce taxes,ease the burden of enterprises and stimulate their vitality.Companies need to focus on the development of their main business,moderate participation in financial activities and establish a reasonable financial risk prevention and control system.Let financial development serve the development of the main business,rather than inhibit it.