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Does managerial myopia promote enterprises over-financialization? Evidence from listed firms in China

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  • Yanchi Chen
  • Ju Ye
  • Qi Shi

Abstract

This paper analyzes the potential shortsightedness of enterprise managers through annual reports. Additionally, we use corporate financial statement data to measure enterprises over-financialization in terms of resource allocation. After testing with a causal inference model, we find that firms with managerial myopia significantly contribute to over-financialization. It remains robust even after the instrumental variable of whether the manager has experienced a famine is used. Furthermore, financial distress and financing constraints amplify the inclination of short-term-focused managers to amass greater financial assets.

Suggested Citation

  • Yanchi Chen & Ju Ye & Qi Shi, 2024. "Does managerial myopia promote enterprises over-financialization? Evidence from listed firms in China," PLOS ONE, Public Library of Science, vol. 19(9), pages 1-18, September.
    • Handle: RePEc:plo:pone00:0309140
    DOI: 10.1371/journal.pone.0309140
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