Role of international communication in mitigating corporate financialization: Reducing information frictions and enhancing governance

This study examines how international communication shapes corporate financialization by reducing information frictions. Empirical evidence shows that exposure to international media significantly curtails corporate financialization, a result that remains consistent across robustness checks, including propensity score matching and instrumental variable methods. Mechanism analyses reveal that international communication primarily constrains financialization by lowering agency costs and enhancing the transparency of environmental, social, and governance (ESG) information, thereby mitigating information asymmetry in financial decision-making. Heterogeneity analyses further show that this restraining effect is stronger for firms with greater financing constraints, larger firms, and those operating in more competitive industries. Overall, the findings highlight international communication as an effective external governance mechanism that limits financialization by improving informational transparency and oversight. The study also offers policy implications, suggesting that promoting international media cooperation and standardized information disclosure can help direct firm resources toward core productive activities and support sustainable economic growth.