This study aims to explain the intrinsic motivation for corporate financialization from the perspective of managerial myopia, answer the question of how managerial myopia influences corporate financialization and explore the boundary conditions of the relationship.
Based on the Management Discussion and Analysis (MD&A) disclosure data of Chinese A-share listed firms from 2007 to 2022, we use the keyword frequency ratio method to measure managerial myopia and examine the relationship between managerial myopia and corporate financialization. The results remain valid after conducting rigorous tests to assess its robustness.
The results indicate that there is a notable positive relationship between managerial myopia and corporate financialization. Institutional ownership and state-owned enterprise nature negatively moderate the relationship between managerial myopia and corporate financialization, whereas marketization degree positively moderates this relationship.
Based on the agency theory, this study focuses on the myopic traits of managers that reflect the micro-mechanisms of enterprises and links the traits with the topical phenomenon of corporate financialization, thereby establishing a theoretical connection between managerial myopia and corporate financialization. Through investigating the moderating effects of institutional investors, marketization degree and property rights nature, this study offers new insights on how macro- and micro-factors moderate the relationship between managerial myopia and corporate financialization in emerging economies.
