Abstract
ABSTRACT In this paper, we investigate the distributional effects of the financialization of firms from the perspective of between-firm inequality. Using financial statement data of nonfinancial firms listed on China’s A-share stock market, we find that the financialization of firms significantly increases the dispersion of employee wage between firms. Mechanism analysis shows the financialization of firms increases between-firm inequality through the larger increasing effect on employee wages for high-wage firms through the rent sharing effect. The findings suggest that an increase in wage rent in low-wage firms could be encouraged to relieve the negative effects of financialization on inequality.
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