Research on the impact of financialization of high-tech manufacturing listed companies on real investment

Abstract

ABSTRACT As economic globalization deepens, financialization becomes a driving force for global economic development. Financialization in high-tech manufacturing companies optimizes capital allocation and enhances overall company value. However, it also poses risks by squeezing limited company resources, leading to a significant shift of industrial capital from the real sector to the virtual sector, impacting real investment levels. This study aims to investigate the impact of financialization on real investment, using a sample of 366 listed high-tech manufacturing companies in China from 2011 to 2020. Empirical analysis reveals that financialization of these companies exerts a crowding-out effect on real investment, leading to a reduction in real investment. Moreover, the influence of different types of financial assets on real investment exhibits variations. Besides, as macroeconomic policies become more lenient, the negative impact of financialization on real investment intensifies, while financial constraints reinforce the adverse relationship between financialization and real investment. Finally, this study provides recommendations to enhance comprehension and guidance of financialization activities among listed high-tech manufacturing companies, aiming to mitigate the detrimental effects of excessive financialization on the real economy.