Financial Asset Allocation, CEO’s Financial Background and Core Business Development

Abstract

The expansion of the financial industry and the development of entity are topics of widespread concern. This paper takes samples of non-financial listed companies from 2013 to 2018 to study the impact of financial asset allocation on core business development, and examine the “moderating effect” of CEO’s financial background. In robustness test, we introduce ITCV to judge the extent of endogeneity. We find that: (i) Corporate financial asset allocation has an adverse effect on core business development and the effect of long-term financial asset allocation is greater than that of short-term financial asset allocation. (ii) The CEO with financial background can alleviate the adverse effect of financial asset allocation on the development of core business, which is mainly reflected in non-state-owned enterprises. (iii) CEO’s background of non-bank financial institutions has a stronger moderating effect compared with the background of financial regulators or banks.