Exploring Nonlinear Linkage between Corporate Financialization and Innovative Efficiency: Identification and Governance of Excessive Financialization

This paper investigates the underlying causes of the nonlinear link between financial asset holdings and innovative efficiency. It identifies an inverted U‐shaped pattern linking corporate financialization to innovation, with financing restrictions, agency costs, and business risk serving as some of...

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Bibliographic Details
Published in:Asia-Pacific journal of financial studies 2024, 53(4), , pp.467-503
Main Author: Xu, Shan
Format: Article
Language:English
Subjects:
Corporate financialization
Excessive financialization governance
Innovative efficiency
Nonlinear relationship
경영학
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Summary:This paper investigates the underlying causes of the nonlinear link between financial asset holdings and innovative efficiency. It identifies an inverted U‐shaped pattern linking corporate financialization to innovation, with financing restrictions, agency costs, and business risk serving as some of the relationship's partial mediating factors. By categorizing financial assets into short‐term monetary and long‐term nonmonetary types, it reveals heterogeneous effects on innovative efficiency, suggesting that the impact is not solely crowding out or a pulling effect but varies based on asset type and proportion. Additionally, it argues for continual adjustment of proper corporate financialization levels based on firm‐specific factors and changing external conditions. Notably, excessive financialization appears less prevalent among Chinese firms, with internal governance and external environmental enhancements recommended to optimize financialization for innovation.
ISSN:2041-9945
2041-6156
DOI:10.1111/ajfs.12482