Keywords
corporate financialization
firm performance
external monitoring
financial assets
How to Cite
Abstract
Purpose – This study examines the relationship between financial analyst coverage and corporate financialization among non-financial A-share listed firms in China from 2008 to 2024.
Theoretical framework – Financialization is measured through both balance sheet and income-based indicators to distinguish structural reallocations from short-term financial gains. Analyst coverage is proxied by the number of brokerage institutions issuing forecasts for each firm.
Design/methodology/approach – Using 12,585 firm-year observations from CSMAR, the analysis employs baseline panel regressions alongside firm and regional controls, payout policy, heterogeneity tests, instrumental variable estimation, lagged models, and alternative econometric specifications. Greater analyst coverage is consistently associated with lower financial asset allocation.
Findings – In the preferred baseline specification, the coefficient for analyst coverage is −0.0062 (p < .01), and it remains −0.0060 (p < .01) after controlling for shareholder payout policy. This negative association is stronger among large firms, firms with higher institutional ownership, firms with CEO–chair duality, and firms outside of highly regulated industries. However, no systematic reversal toward greater financialization is observed. A supplementary performance analysis identified a nonlinear association between financialization and return on assets.
Practical and social implications of the research – The findings suggest that analysts act as intermediaries of external information related to corporate asset composition. The economic implications of financialization depend on its intensity and institutional context.
Originality/value – Financial asset holdings should not be uniformly interpreted as an inefficient diversion from productive investment.
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