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The Impact Of Financing Method On Financialization Of Non-financial Enterprises

Posted on:2023-04-25Degree:MasterType:Thesis
Country:ChinaCandidate:L F YangFull Text:PDF
GTID:2569306770962459Subject:Finance
Abstract/Summary:PDF Full Text Request
With the rapid development of China’s financial industry at the present stage,a large number of entity enterprises have separated from the real economy and set foot in financial activities.The increasing share of financial assets held by real companies and the share of investment income has been described as "financialisation of the business".Existing literature mainly focuses on the economic consequences of corporate financialization,but relatively few researches on the influencing factors of corporate financialization.This paper tries to explore its influence on the financialization of enterprises from the perspective of corporate financing methods.In recent years,China has actively introduced policies to improve the financing environment of enterprises,and the choice of financing methods of enterprises is more flexible.Equity financing and debt financing have different potential impacts on investment decisions of financial assets.Shareholders have the goal of wealth maximization.In order to achieve the performance expected by shareholders and maintain their own high salary and welfare,corporate management will choose to hold some financial assets in pursuit of high returns.Financial investment will bring additional risk exposure to enterprises,but cannot increase the income of creditors.Therefore,in order to ensure that the creditors can recover the principal and interest on time,it will restrict enterprises’ investment in financial assets.Therefore,this paper proposes the hypothesis that equity financing will promote the financialization of enterprises,while debt financing will inhibit the financialization.In addition,this paper explores the moderating effect of dividend distribution policy on the above influencing mechanism.The higher the dividend distribution rate is,the greater the shareholder’s income will be,and the less retained earnings can be used for long-term operation of the enterprise.Therefore,enterprises tend to choose financial investment with a shorter period than industrial investment.The higher dividend distribution rate will enhance the positive effect of equity financing on financialization.On this basis,this paper divides financial assets into reserve financial assets and profit-seeking financial assets for further study.For capital reserve motive,enterprises will hold the financial assets with good liquidity and low risk and return,while for profit motive,enterprises will hold the financial assets with poor liquidity and high risk and return.Shareholders prefer profit-seeking financial assets in order to obtain high returns,while creditors pay more attention to limit profit-seeking financial assets investment in order to control risks.As for the structure of the paper,the paper initially briefly describes the background of the financialization of real enterprises and the research results of domestic and foreign literature.Secondly,using the theories of information asymmetry,shareholder wealth maximization and so on,this paper studies the mechanism of the influence of different financing methods on the financialization of enterprises and puts forward relevant hypotheses.In the end,the non-financial and non-real estate listed companies in Shanghai and Shenzhen A-share sectors from2009 to 2020 are selected as the research objects for empirical analysis,and the heterogeneity analysis and robustness test are conducted based on the nature of corporate property rights and the degree of regional financial development.The research results are as follows :(1)The proportion of equity financing is positively correlated with the level of corporate financialization,while the proportion of debt financing is negatively correlated with the level of corporate financialization;(2)Dividend distribution rate has a moderating effect on the effect of equity financing on financialization;(3)The positive impact of equity financing on profit-driven financialization is greater than that on reserve financialization,and the negative impact of debt financing on profit-driven financialization is greater than that on reserve financialization;(4)The positive impact of equity financing on financialization is more significant for non-state-owned enterprises and enterprises with high financialization development in the region;The governance effect of debt financing of non-state-owned enterprises is also stronger.The possible contributions of this paper are:(1)The existing literature mainly focuses on the impact of factors such as macroeconomic policies,management background,and financing constraints on financialization,while there are few studies on the impact of different financing methods on corporate financialization.This paper enriches the study of the influencing factors of financialization.(2)This paper compares and analyzes the differences in the impact of financing methods on financialization with different motivations,and also analyzes the heterogeneity of the impact of financing methods on financialization from the nature of enterprise property rights and the level of regional financial development,and deepens the relevant research and analysis.
Keywords/Search Tags:Equity financing, Debt financing, Financialization
PDF Full Text Request
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