Changyuan Xia, Xieen Mao, Haizong Yu and Kam C. Chan
This paper aims to investigate the impact of a firm’s pension insurance contributions (PIC) on its financialization (investment in risky assets) using a sample of Chinese firms.
Abstract
Purpose
This paper aims to investigate the impact of a firm’s pension insurance contributions (PIC) on its financialization (investment in risky assets) using a sample of Chinese firms.
Design/methodology/approach
The authors use a multiple regression model to conduct the analysis.
Findings
The findings suggest that a firm’s PIC increases its financialization. Additional analysis suggests that firms with higher PIC are more likely to have lower operating profit and higher financial risk. In addition, the impact of PIC on financialization is more salient when a firm faces high industry competitiveness, holds more cash, has high labor costs and labor intensity or is non-state owned.
Practical implications
The paper adds to the growing literature on the effect of social insurance on corporate policies. The findings complement those related to the relationship between defined contributions and defined benefits retirement plans and corporate policies.
Social implications
The study contributes to the debate on the merits of financialization. The literature is mixed on the pros and cons of financialization. The results suggest that financialization has an adverse effect on a firm’s performance and risk in the lens of increased PIC.
Originality/value
China has seen a trend of financialization arising from the rapid economic development in the past decade. Moreover, the PIC premiums in China are not trivial. Thus, the significant cost of PIC and the financialization trend suggest that the answer to the research question is timely and meaningful.
Details
Keywords
Yilin Zhang, Changyuan Gao and Jing Wang
This study aims to explore the relationship between financing constraints and the innovation performance of Internet enterprises in the cross-border innovation cooperation…
Abstract
Purpose
This study aims to explore the relationship between financing constraints and the innovation performance of Internet enterprises in the cross-border innovation cooperation network. The study also analyzes the moderating effect of the location of the cross-border innovation cooperation network.
Design/methodology/approach
The authors selected patent data, related transaction data and other data of A-share listed companies on Shanghai and Shenzhen stock exchanges from 2014 to 2019. The generalized moment estimation method of instrumental variables (IV-GMM) method was used to analyze the relationship between financing constraints and the innovation performance of Internet firms and the moderating effect of the cross-border innovation cooperation network location. The threshold value of the moderating effect of the network structure hole was calculated with the threshold model.
Findings
The empirical results show a significant inverted U-shaped relationship between financing constraints and the innovation performance in the cross-border innovation cooperation network of Internet enterprises. Network centrality positively moderates this relationship. There is a threshold for the adjustment effect of network-structural holes, and the adjustment intensity of structural holes changes before and after the threshold.
Originality/value
This study provides a new perspective for Internet firms in innovation cooperation networks to alleviate the negative impact of financing constraints on innovation performance. The inverted U-shaped relationship between financing constraints and the innovation performance of Internet enterprises is in two stages. The moderating range of network centrality and the structural hole besides the threshold of the moderating effect of a structural hole are detailed.