Diversification and financialization of non-financial corporations: Evidence from China

Feng, Yumei; Yao, Shouyu; Wang, Chunfeng; Liao, Jing; Cheng, Feiyang

doi:10.1016/j.ememar.2021.100834

Cited by 53 publications

(27 citation statements)

References 62 publications

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“…Based on this, controls for corporate governance characteristics are added, including board size (Board), management shareholding (Mhold), and senior executives' academic background (MColl). Third, Feng et al (2022) found that there are great differences in the financial investment levels of state-owned and non-state-owned enterprises, as well as enterprises with different technological attributes. Therefore, enterprise characteristics are controlled, including the company's establishment period (Age), enterprise nature (SOE), technological attributes (Tech), and type of audit opinion (Opin).…”

Section: Control Variablesmentioning

confidence: 99%

Are environmental regulation tools effective? An analysis based on financial investment of entity enterprises

Niu

Wang²,

Yang³

2022

Front. Environ. Sci.

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Environmental regulation and economic development are consistent in the long run, but there are certain contradictions in the short term. Examining the characteristics of available environmental regulation tools and using them in a way that will align the interests of local governments and enterprises can improve environmental regulation and enhance green transformation and development. This study considers two general types of environmental regulation tools: negative punishment types and positive incentive types. Applying an intermediary effect model and the two-stage least squares method, a sample of Chinese A-share listed companies from 2007 to 2019 is used to test the impact of these different types of environmental regulation tools on the financial investment levels of entity enterprises. The mechanism through which these macro-environmental regulation tools function and the micro-enterprise heterogeneity factors that influence their impact are systematically studied. The results show that negative punishment type environmental regulation tools have a positive impact on the financial investment levels of entity enterprises, while positive incentive type environmental regulation tools inhibit financial investment levels. This impact is formed through managerial incentive mechanisms referred to as “whipping the fast ox” and “heavy rewards and light punishments.” Factors such as financing constraints, relocation costs, pollution levels, and enterprise scale have heterogeneous effects on these paths. Policy suggestions are offered based on the findings. This study makes a significant contribution to the literature by clarifying the channel through which environmental regulation influences micro-enterprise decision-making. It provides a theoretical basis and policy reference for local government officials as they address the conflict between economic growth and environmental protection in the short term. Moreover, the results offer long-term development decision-making ideas for shareholders and managers in the process of green transformation and upgrading of enterprises.

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Section: Control Variablesmentioning

confidence: 99%

Are environmental regulation tools effective? An analysis based on financial investment of entity enterprises

Niu

Wang²,

Yang³

2022

Front. Environ. Sci.

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“… (1) Analyst coverage and audit firms The opportunity to commit misconduct is higher in firms with weak external monitoring. Analysts and auditors are generally regarded as two mechanisms of external monitoring (e.g., Cheng et al, 2020; Feng et al, 2022; Su & Liu, 2021; Yao et al, 2020). We first test whether the inhibitory effect varies in firms with different levels of analyst coverage.…”

Section: Mechanism and Further Analysesmentioning

confidence: 99%

Common institutional ownership and corporate misconduct

Wang

Zhen-ming

2022

Manage Decis Econ

Self Cite

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This paper explores the relationship between common institutional ownership and corporate misconduct. Empirical evidence indicates that common institutional blockholders (institutional blockholders with multiple blockholdings), with advantages in information, experience and resources, can effectively inhibit corporate misconduct. Furthermore, the inhibitory effect is stronger in firms prone to commit misconduct. Empirical results also support the role of state blockholders with multiple blockholdings and common institutional blockholders with high ownership proportions in restraining corporate misconduct. This paper contributes to the heated debate on the economic implications of common ownership and provides additional evidence for the role of common blockholders in Chinese capital markets.

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“…Thus, this demonstrates that the excessive engagement of non-financial capital enterprises in financial business development has certain negative effects on individuals, enterprises, and society, although the development of corporate financialization promotes the rapid development of enterprises to a certain extent; moreover, to curb corporate financialization, it is necessary to explore the reasons behind the influence of corporate financialization. The literature on the causes of corporate financialization mainly covers shareholder value creation pressures (Modell & Yang, 2018), technological and ideological changes (Davis & Kim, 2015), trust structures (Harrington, 2017), employee stock ownership plans (Feng et al, 2022a), business diversification (Feng et al, 2022b), multiple blockholders (Jiang et al, 2022), and increases in the cash holdings of non-financial firms, and it provides support for the possibilities that traditional non-financial firms are increasingly engaging in for-profit lending (Davis, 2018). While most of these influences have been studied only in terms of corporate behavior and social relations, few studies have explored how institutional reforms and related policy implementations can influence corporate financialization.…”

Section: Introductionmentioning

confidence: 99%

Can green credit policy under the concept of green economy curb corporate financialization to promote sustainable development?

Strielkowski²,

Li³

et al. 2023

Front. Environ. Sci.

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Under the concept of green economy, discovering how to utilize the Green Credit Guidelines in a way that guides enterprises to focus on their industries and to promote sustainable development has become an important and urgent objective. It is also conducive to the successful implementation of the “double-carbon target”. This paper uses Chinese A-share listed enterprises from 2007–2018 as its research object to explore whether green credit policy is conducive to reducing the financialization behavior of heavily polluting enterprises to curb their transformation from real to virtual. It is found that the financialization of heavily polluting enterprises has significantly decreased since the implementation of the Green Credit Guidelines in 2012, and these results remain unchanged after a series of robustness tests. A heterogeneity analysis shows that state-owned enterprises are subject to stronger policy effects than non-state-owned enterprises; furthermore, the studied policy effects are stronger in the eastern regions of China than in its central and western regions, and these effects are stronger in green provinces than in polluting provinces. A mechanism study finds that credit constraints and corporate innovation play a partially mediating role in the effect of green credit policy on corporate financialization. Further studies find that both the level of internal corporate governance and external monitoring contribute to the disincentivizing effect of green credit policy on financialization. Moreover, through an exploration of the possible economic consequences of the examined policy, it is found that the green credit policy reduces corporate financialization in favor of reducing inefficient corporate investment and major shareholders’ tunneling so that the level of corporate investor protection is improved. The findings validate the effectiveness of the Green Credit Guidelines and provide empirical evidence and empirical support for reducing corporate financialization to curb enterprises’ transformation from real to virtual and thus promoting the development of sustainability.

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Diversification and financialization of non-financial corporations: Evidence from China

Cited by 53 publications

References 62 publications

Are environmental regulation tools effective? An analysis based on financial investment of entity enterprises

Are environmental regulation tools effective? An analysis based on financial investment of entity enterprises

Common institutional ownership and corporate misconduct

Can green credit policy under the concept of green economy curb corporate financialization to promote sustainable development?

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