Yinchao Liao , Jun Wang , Wenru Liao , Xiaoyang Shu , Zhiyong Li
{"title":"Buffer or substitute? Corporate financialization and leverage manipulation","authors":"Yinchao Liao , Jun Wang , Wenru Liao , Xiaoyang Shu , Zhiyong Li","doi":"10.1016/j.pacfin.2024.102508","DOIUrl":null,"url":null,"abstract":"<div><p>This study examines the impact of financialization on leverage manipulation for nonfinancial companies in China from 2011 to 2021. Using the XLT-LEVM measurement method, we find that corporate financialization can inhibit leverage manipulation. Mechanism analysis suggests that corporate financialization deters leverage manipulation by crowding out debt financing in a substantive way. According to heterogeneity analysis, the inhibitory effect is less pronounced in firms with short-term solvency pressure and intensive external attention. Our findings extend the literature on corporate financialization and demonstrate its role in mitigating leverage manipulation, with implications for both financial practice and public policy.</p></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"87 ","pages":"Article 102508"},"PeriodicalIF":4.8000,"publicationDate":"2024-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Pacific-Basin Finance Journal","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0927538X24002609","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This study examines the impact of financialization on leverage manipulation for nonfinancial companies in China from 2011 to 2021. Using the XLT-LEVM measurement method, we find that corporate financialization can inhibit leverage manipulation. Mechanism analysis suggests that corporate financialization deters leverage manipulation by crowding out debt financing in a substantive way. According to heterogeneity analysis, the inhibitory effect is less pronounced in firms with short-term solvency pressure and intensive external attention. Our findings extend the literature on corporate financialization and demonstrate its role in mitigating leverage manipulation, with implications for both financial practice and public policy.
期刊介绍:
The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.