Overseas operations and corporate financial asset allocation
Using data on Chinese listed companies for 2008–2018, we find that firms participating in overseas operations, proxied by overseas subsidiaries, generally have higher financial asset allocations than other firms. At the micro level, the effects are more pronounced when the parent company faces serious financing constraints, has no overseas returned executives, has a business that is inconsistent with that of its overseas subsidiaries and has overseas subsidiaries that experience losses. At the macro level, the effects are more pronounced when overseas operations are in OECD and Belt and Road countries, or in areas with higher economic or political risks and greater investment opportunities. Financial asset allocation helps mitigate cash flow fluctuations and operational risks for multinational firms. This study advances research on the determinants of financial asset allocation and has implications relevant to the Chinese government’s “Go Global” and Belt and Road strategies and its efforts to realize a developed financial sector to service the Chinese economy.
Authors
- Shangkun Liang (ORCID: https://orcid.org/0000-0001-5049-1686)
- Yuhao Niu
- Chun Yuan (ORCID: https://orcid.org/0000-0002-3590-6676)
- Sichao Wang
Institutions
- Beijing Foreign Studies University (CN)
- Central University of Finance and Economics (CN)
Publication Details
- Journal
- China Journal of Accounting Research
- Published
- 2024-08-12
- DOI
- https://doi.org/10.1016/j.cjar.2024.100388
- Citations
- 2
- Primary Topic
- Corporate Finance and Governance
- Type
- article
- Field-Weighted Citation Impact
- 1.89
Funders
- National Natural Science Foundation of China
- National Office for Philosophy and Social Sciences
- National Social Science Fund of China