Original scientific paper
https://doi.org/10.1080/1331677X.2023.2165526
How does corporate financialization affect operational risk? Evidence from Chinese listed companies
Mingjun Deng
Xusheng Fang
Qinke Lyu
Wenbing Luo
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.
Keywords
Non-financial companies; corporate financialization; operational risk; product market competition
Hrčak ID:
319255
URI
Publication date:
13.1.2023.
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