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Corporate Financialization, Financing Constraints, and Environmental Investment

Author

Listed:
  • Lan Tao

    (School of Economics and Management, China University of Geosciences, Wuhan 430074, China)

  • Lianfang Chen

    (School of Economics and Management, China University of Geosciences, Wuhan 430074, China)

  • Kun Li

    (School of Economics and Management, China University of Geosciences, Wuhan 430074, China)

Abstract

This paper took non-financial listed companies on A-shares from 2014 to 2018 as samples to empirically test the relationship between corporate financialization, financing constraints, and environmental investment. The empirical results showed that the degree of corporate financialization is negatively related to environmental investment, and the negative relationship between long-term financial assets and environmental investment is more significant. Financialization has a “crowding out” effect on environmental investment when the firm is a non-state enterprise or a small-scale enterprise. Financialization has a “reservoir” effect on environmental investment when it is subject to less financing constraints. Further analysis revealed that both long-term and short-term financial assets have an inhibiting effect on environmental investment when environmental regulations are stringent. This paper provides a theoretical reference for companies to make investment decisions on financial assets and to improve their ability on environmental investment and green sustainability.

Suggested Citation

  • Lan Tao & Lianfang Chen & Kun Li, 2021. "Corporate Financialization, Financing Constraints, and Environmental Investment," Sustainability, MDPI, vol. 13(24), pages 1-17, December.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:24:p:14040-:d:706403
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    Citations

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    Cited by:

    1. Jin, Xiao Meng & Mai, Yong & Cheung, Adrian Wai Kong, 2022. "Corporate financialization and fixed investment rate: Evidence from China," Finance Research Letters, Elsevier, vol. 48(C).
    2. Ruize Cai & Kyung Hwan Yun & Minho Kim, 2022. "Financing Constraints and Corporate Value in China: The Moderating Role of Multinationality and Ownership Type," Sustainability, MDPI, vol. 14(19), pages 1-22, September.

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