Enterprise financialization and R&amp;D innovation: A case study of listed companies in China

Yue Liu; Jinzhi Liu; Lichang Zhang; Yue Liu; Jinzhi Liu; Lichang Zhang

doi:10.3934/era.2023124

Electronic Research Archive

2023, Volume 31, Issue 5: 2447-2471. doi: 10.3934/era.2023124

Previous Article Next Article

Research article Special Issues

Enterprise financialization and R&D innovation: A case study of listed companies in China

Business School, Hunan Institute of Technology, Hengyang 421000, China

Received: 19 January 2023 Revised: 14 February 2023 Accepted: 16 February 2023 Published: 02 March 2023

In financial asset allocation, enterprises adjust their investment in R&D innovation according to their motives and the external environment. Based on a review of the literature related to enterprise financialization and R&D innovation, this paper proposes research hypotheses through theoretical analysis first; then, taking China's A-share non-financial listed companies from 2010 to 2019 as research objects, this paper explores the relationship between enterprise financialization and R&D innovation with a quantile panel data model; further, the heterogeneous relationship between the two under different business cycle phases is empirically analyzed. The following conclusions are drawn. First, there is a dynamic relationship between enterprise financialization and R&D innovation, varying with different financing constraints. Second, the dynamic relationship between enterprise financialization and R&D innovation stems from the motivation difference in enterprise asset allocation. Third, there are significant differences in the dynamic relationship at different business cycle phases.
- enterprise financialization,
- R&D innovation,
- dynamic relationship,
- financing constraints,
- business cycle
Citation: Yue Liu, Jinzhi Liu, Lichang Zhang. Enterprise financialization and R&D innovation: A case study of listed companies in China[J]. Electronic Research Archive, 2023, 31(5): 2447-2471. doi: 10.3934/era.2023124

Related Papers:

Abstract

In financial asset allocation, enterprises adjust their investment in R&D innovation according to their motives and the external environment. Based on a review of the literature related to enterprise financialization and R&D innovation, this paper proposes research hypotheses through theoretical analysis first; then, taking China's A-share non-financial listed companies from 2010 to 2019 as research objects, this paper explores the relationship between enterprise financialization and R&D innovation with a quantile panel data model; further, the heterogeneous relationship between the two under different business cycle phases is empirically analyzed. The following conclusions are drawn. First, there is a dynamic relationship between enterprise financialization and R&D innovation, varying with different financing constraints. Second, the dynamic relationship between enterprise financialization and R&D innovation stems from the motivation difference in enterprise asset allocation. Third, there are significant differences in the dynamic relationship at different business cycle phases.

References

[1]	J. M. Keynes, The General Theory of Interest, Employment and Money, (2018), 152–180. https://doi.org/10.1007/978-3-319-70344-2
[2]	Z. Y. Xiao, L. Lin, Financialization, life cycle and persistent innovation: an empirical research based on the industrial difference, J. Finance Econ., 45 (2019), 43–57. https://doi.org/10.16538/j.cnki.jfe.2019.08.003 doi: 10.16538/j.cnki.jfe.2019.08.003
[3]	H. B. Huang, S. P. Zhai, J. N. Chen, Corporate life cycle, financing methods and financing constraints—based on the moderating effect research of investor sentiment, J. Financ. Res., 07 (2016), 96–112.
[4]	M. Yan, The modern corporation and private property, in Encyclopedia of Sustainable Management, Springer, Cham, 2020. https://doi.org/10.1007/978-3-030-02006-4_428-1
[5]	Z. Li, F. Zou, B. Mo, Does mandatory CSR disclosure affect enterprise total factor productivity, Economic Res.-Ekonomska Istraživanja, 35 (2022), 4902–4921. https://doi.org/10.1080/1331677X.2021.2019596 doi: 10.1080/1331677X.2021.2019596
[6]	Y. Liu, P. Failler, L. M. Chen, Can mandatory disclosure policies promote corporate environmental responsibility?—Quasi-natural experimental research on China, Int. J. Environ. Res. Public Health, 18 (2021), 6033. https://doi.org/10.3390/ijerph18116033 doi: 10.3390/ijerph18116033
[7]	Y. Liu, P. Failler, Y. Ding, Enterprise financialization and technological innovation: Mechanism and heterogeneity, PLoS ONE, 17 (2022), e0275461. https://doi.org/10.1371/journal.pone.0275461 doi: 10.1371/journal.pone.0275461
[8]	Y. Z. Wang, M. Song, Macroeconomic uncertainty, demand for financing and corporate investment, Econ. Res. J., 49 (2014), 4–17.
[9]	Z. Li, J. Zhong, Impact of economic policy uncertainty shocks on China's financial conditions, Financ. Res. Lett., 35 (2020), 101303. https://doi.org/10.1016/j.frl.2019.101303 doi: 10.1016/j.frl.2019.101303
[10]	Z. Li, G. Liao, K. Albitar, Does corporate environmental responsibility engagement affect firm value? The mediating role of corporate innovation, Bus. Strategy Environ., 29 (2020), 1045–1055. https://doi.org/10.1002/bse.2416 doi: 10.1002/bse.2416
[11]	R. U. Khan, H. Arif, N. E. Sahar, A. Ali, M. A. Abbasi, The role of financial resources in SMEs' financial and environmental performance; the mediating role of green innovation, Green Finance, 4 (2022), 36–53. https://doi.org/10.3934/GF.2022002 doi: 10.3934/GF.2022002
[12]	Z. Yang, F. Liu, H. J. Wang, Are corporate financial assets allocated for capital reserve or speculative purpose, Manage. Rev., 29 (2017), 13–25+34. https://doi.org/10.14120/j.cnki.cn11-5057/f.2017.02.002 doi: 10.14120/j.cnki.cn11-5057/f.2017.02.002
[13]	Z. H. Huang, X. Li, S. L. Chen, Financial speculation or capital investment? Evidence from relationship between corporate financialization and green technology innovation, Front. Environ. Sci-Switz., 8 (2021). https://doi.org/10.3389/FENVS.2020.614101 doi: 10.3389/FENVS.2020.614101
[14]	R. Duchin, T. Gilbert, J. Harford, C. Hrdlicka, Precautionary savings with risky assets: When cash is not cash, J. Finance, 72 (2017), 793–852. https://doi.org/10.1111/jofi.12490 doi: 10.1111/jofi.12490
[15]	Y. M. Hu, X. T. Wang, J. Zhang, The Motivation for financial asset allocation: Reservoir or substitution?—Evidence from Chinese listed companies, Econ. Res. J., 52 (2017), 181–194.
[16]	W. F. Xu, Q. S. Ruan, G. D. Wang, External environmental risk perception of private entrepreneurs and innovation investment of enterprises, Sci. Res. Manage., 42 (2021), 160–171. https://doi.org/10.19571/j.cnki.1000-2995.2021.03.016 doi: 10.19571/j.cnki.1000-2995.2021.03.016
[17]	O. Sukharev, E. Voronchikhina, Financial and non-financial investments: Comparative econometric analysis of the impact on economic dynamics, Quant. Finance Econ., 4 (2020), 382–411. https://doi.org/10.3934/qfe.2020018 doi: 10.3934/qfe.2020018
[18]	M. X. Wang, L. Li, H. Y. Lan, The measurement and analysis of technological innovation diffusion in China's manufacturing industry, Natl. Account. Rev., 3 (2021), 452–471. https://doi.org/10.3934/NAR.2021024 doi: 10.3934/NAR.2021024
[19]	M. Q. Sheng, S. Wang, Y. P. Shang, Financial assets allocation and entity enterprises' total factor productivity: "integration of industrial—finance capital" or "removing reality to virtual", Finance Trade Res., 10 (2018), 87–97. https://doi.org/10.19337/j.cnki.34-1093/f.2018.10.008 doi: 10.19337/j.cnki.34-1093/f.2018.10.008
[20]	Z. Liu, X. Li, X. Peng, Green or nongreen innovation? Different strategic preferences among subsidized enterprises with different ownership types, J. Clean Prod., 245 (2020), 118786. https://doi.org/10.1016/j.jclepro.2019.118786 doi: 10.1016/j.jclepro.2019.118786
[21]	L. W. Cheng, X. Y. Dai, The distribution of R&D investment and influence factors of R&D intensity based on 300,000 industrial enterprises' panel data in China, China Soft Sci., 8 (2012), 152–165.
[22]	Y. Liu, C. Ma, Z. Huang, Can the digital economy improve green total factor productivity? An empirical study based on Chinese urban data, Math. Biosci. Eng., 20 (2023), 6866–6893. https://doi.org/10.3934/mbe.2023296 doi: 10.3934/mbe.2023296
[23]	H. F. Gu, H. H. Zhang, Enterprise financialization, financing constraints and corporate innovation mediating effect of monetary policy, Mod. Econ. Sci., 42 (2020), 74–89.
[24]	G. Desalegn, A. Tangl, Forecasting green financial innovation and its implications for financial performance in Ethiopian Financial Institutions: Evidence from ARIMA and ARDL model, Natl. Account. Rev., 4 (2022), 95–111. https://doi.org/10.3934/NAR.2022006 doi: 10.3934/NAR.2022006
[25]	P. Z. Liu, Y. M. Zhao, J. N. Zhu, C. Y. Yang. Technological industry agglomeration, green innovation efficiency, and development quality of city cluster, Green Finance, 4 (2022), 411–435. https://doi.org/10.3934/GF.2022020 doi: 10.3934/GF.2022020
[26]	Z. Li, C. Yang, Z. Huang, How does the fintech sector react to signals from central bank digital currencies? Finance Res. Lett., 50 (2022), 103308. https://doi.org/10.1016/j.frl.2022.103308 doi: 10.1016/j.frl.2022.103308
[27]	J. Atta-Mensah, Commodity-linked bonds as an innovative financing instrument for African countries to build back better, Quant. Finance Econ., 5 (2021), 516–541. https://doi.org/10.3934/QFE.2021023 doi: 10.3934/QFE.2021023
[28]	T. I. Palley, Financialization: What It Is and Why It Matters, Levy Economics Institute Working Paper No. 525. http://dx.doi.org/10.2139/ssrn.1077923
[29]	Y. Su, Z. Li, C. Yang, Spatial interaction spillover effects between digital financial technology and urban ecological efficiency in China: An empirical study based on spatial simultaneous equations, Int. J. Environ. Res. Public Health, 18 (2021), 8535. https://doi.org/10.3390/IJERPH18168535 doi: 10.3390/IJERPH18168535
[30]	Z. Li, H. Chen, B. Mo, Can digital finance promote urban innovation? Evidence from China, Borsa Istanbul Rev., 11 (2022). https://doi.org/10.1016/j.bir.2022.10.006 doi: 10.1016/j.bir.2022.10.006
[31]	Y. Liu, P. Failler, Z. Liu, Impact of environmental regulations on energy efficiency: A case study of China's air pollution prevention and control action plan, Sustainability, 14 (2022), 3168. https://doi.org/10.3390/su14063168 doi: 10.3390/su14063168
[32]	Z. Huang, H. Dong, S. Jia, Equilibrium pricing for carbon emission in response to the target of carbon emission peaking, Energy Econ. 112 (2022), 106160. https://doi.org/10.1016/j.eneco.2022.106160 doi: 10.1016/j.eneco.2022.106160
[33]	F. Demir, Financial liberalization, private investment and portfolio choice: Financialization of real sectors in emerging markets, J. Dev. Econ., 88 (2009), 314–324. https://doi.org/10.1016/j.jdeveco.2008.04.002 doi: 10.1016/j.jdeveco.2008.04.002
[34]	J. Song, Y. Lu, U-shape relationship between non-currency financial assets and operating profit: Evidence from financialization of Chinese listed non-financial corporates, J. Financ. Res., 6 (2015), 111–127.
[35]	G. C. Liu, Financial asset allocations and the firms' R&D activity in China: Crowding-out or crowding-in, Stat. Res., 34 (2017), 49–61. https://doi.org/10.19343/j.cnki.11-1302/c.2017.07.005 doi: 10.19343/j.cnki.11-1302/c.2017.07.005
[36]	H. J. Wang, Y. Q. Cao, Q. Yang, Z. Yang, Does the financialization of non-financial enterprises promote or inhibit corporate innovation, Nankai Bus. Rev., 20 (2017), 155–166. https://doi.org/10.3969/j.issn.1008-3448.2017.01.014 doi: 10.3969/j.issn.1008-3448.2017.01.014
[37]	M. Xu, K. Albitar, Z. Li, Does corporate financialization affect EVA? Early evidence from China, Green Finance, 2 (2020), 392–408. https://doi.org/10.3934/GF.2020021 doi: 10.3934/GF.2020021
[38]	M. Hong, B. Drakeford, K. Zhang, The impact of mandatory CSR disclosure on green innovation: evidence from China, Green Finance, 2 (2020), 302–322. https://doi.org/10.3934/GF.2020017 doi: 10.3934/GF.2020017
[39]	Z. Li, F. Zou, B. Mo, Does mandatory CSR disclosure affect enterprise total factor productivity, Econ. Res-Ekonomska Istraživanja, 35 (2021), 1–20. https://doi.org/10.1080/1331677X.2021.2019596 doi: 10.1080/1331677X.2021.2019596
[40]	A. F. Burns, W. C. Mitchell, Measuring Business Cycles, NBER, 1946.
[41]	F. Q. Shi, Empirical analysis of China's business cycle, Stat. Res., 7 (2000), 59–62.
[42]	Y. Liu, Z. Li, M. Xu, The influential factors of financial cycle spillover: Evidence from China, Emerging Mark. Finance Trade, 56 (2020), 1336–1350. https://doi.org/10.1080/1540496x.2019.1658076 doi: 10.1080/1540496x.2019.1658076
[43]	Z. Du, Y. Li, G. Lv, Evaluating the nonlinear relationship between nonfinancial corporate sector leverage and financial stability in the post crisis era, AIMS Math., 7 (2022), 20178–20198. https://10.3934/math.20221104 doi: 10.3934/math.20221104
[44]	B. Bernanke, M. Gertler, Agency costs, net worth, and business fluctuations, Am. Econ. Rev., 79 (1989), 14–31.
[45]	T. Li, X. Li, G. Liao, Business cycles and energy intensity. Evidence from emerging economies, Borsa Istanbul Rev., 22 (2022), 560–570. https://doi.org/10.1016/j.bir.2021.07.005 doi: 10.1016/j.bir.2021.07.005
[46]	X. Chang, The impact of corporate tax outcomes on forced CEO turnover, Natl. Account. Rev., 4 (2022), 218–236. https://10.3934/NAR.2022013 doi: 10.3934/NAR.2022013
[47]	J. A. Schumpeter, The Theory of Economic Development, Translated from the German by REDVERS OPIE, Cambridge, Harvard University Press, 1934.
[48]	L. Chen, Z. Du, Z. Hu, Impact of economic policy uncertainty on exchange rate volatility of China, Finance Res. Lett., 32 (2020), 101266. https://10.1016/j.frl.2019.08.014 doi: 10.1016/j.frl.2019.08.014
[49]	G. Liao, P. Hou, X. Shen, K. Albitar, The impact of economic policy uncertainty on stock returns: The role of corporate environmental responsibility engagement, Int. J. Finance Econ., 26 (2020), 4386–4389. https://doi.org/10.1002/ijfe.2020 doi: 10.1002/ijfe.2020
[50]	Y. Liu, L. Chen, L. Lv, P. Failler. The impact of population aging on economic growth: a case study on China, AIMS Math, 8 (2023), 10468–10485. https://doi.org/10.3934/math.2023531 doi: 10.3934/math.2023531
[51]	C. W. J. Granger, T. Teräsvirta, Modelling Non-Linear Economic Relationships, OUP Catalogue, Oxford University Press, 1993. https://doi.org/10.1002/jae.3950090412
[52]	A. Gonzalez, T. Teräsvirta, D. Dijk, Y. Yang, Panel smooth transition regression models, No. 604, SSE/EFI Working Paper Series in Economics and Finance, Stockholm School of Economics, 2017.

Reader Comments

Your name:*

Email:*
© 2023 the Author(s), licensee AIMS Press. This is an open access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0)