The role of management characteristics in trade frictions and corporate financialization

Abstract

This paper selects A-share listed companies involved in overseas operations from 2008 to 2012 to explore the complex relationship between trade frictions and corporate financialization in depth. The study results show that trade frictions have a significant positive effect on the level of corporate financialization, and this effect is more significant in the presence of self-interested motives of managers. It is also found that trade frictions further promote corporate financialization by affecting managers' myopia. This finding has important theoretical and practical implications for understanding the impact of trade frictions on firms' strategic choices and formulating corresponding policy recommendations.