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.

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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

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article

Overseas operations and corporate financial asset allocation

Shangkun Liang, Yuhao Niu, Chun Yuan, Sichao Wang
2 citations
China Journal of Accounting Research
Corporate Finance and Governance
1.89
article

Overseas operations and corporate financial asset allocation

Shangkun Liang, Yuhao Niu, Chun Yuan, Sichao Wang
article en
2 citations

Abstract

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.

China Journal of Accounting ResearchVol. 17(4)
Beijing Foreign Studies University (CN), Central University of Finance and Economics (CN)
National Natural Science Foundation of China, National Office for Philosophy and Social Sciences, National Social Science Fund of China
Openalex Percentile: Top 12%
Corporate Finance and Governance
1.89
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Overseas operations and corporate financial asset allocation — Shangkun Liang, Yuhao Niu, et al. · China Journal of Accounting Research (2024) | TGRS Research Map | TGRS