Does patient capital suppress corporate financial asset allocation? A pre-registered report

Improving corporate financial asset allocation and allocating capital to sustainably support the real economy have become urgent considerations amid the growing dangers posed by the global economy's shift from the real to the virtual sector. Can patient capital—a revolutionary form of capital that prioritizes long-term investment, risk sharing, and value creation—influence corporate financial asset allocation? This study uses data from Chinese A-share-listed firms from 2006 to 2023, employing a two-way fixed effects model to empirically reveal that patient capital markedly reduces corporate financial asset allocation. The principal mechanisms are alleviating managerial myopia, promoting technology research and development investment, and enhancing firms' expectations. Heterogeneity analysis reveals that the constraining effect of patient capital is more pronounced for state-owned enterprises and profit oriented firms. Our results demonstrate that patient capital bolsters business resilience by restricting financial asset allocation. These insights provide empirical evidence for enhancing corporate capital allocation frameworks and fostering high-quality synergy between capital markets and the real economy. These findings provide significant insights for emerging nations seeking to improve corporate resilience via patient capital.