How Does Corporate Financialization Affect R&D Investment? — Empirical Evidence from the Perspective of Analyst Coverage

Against the backdrop of declining return on real investment and relatively rising returns from financial assets, corporate financialization may reshape the internal resource allocation of enterprises and affect long-term innovation activities. Using a sample of Chinese A-share listed manufacturing firms, this paper adopts firm fixed-effect and year fixed-effect models to examine the impact of corporate financialization on the intensity of R&D investment and its underlying mechanism. The study finds that corporate financialization significantly reduces R&D investment intensity. Mechanism analysis shows that financialization markedly cuts down the number of analyst forecast reports, the number of covering analysts and the number of distinctive research reports, and the deterioration of information environment serves as an important channel through which financialization affects R&D investment. Heterogeneity analysis indicates that the negative effect of financialization is more pronounced in small-scale enterprises, high-tech manufacturing enterprises and non-state-owned enterprises. The conclusion remains robust after replacing core variables, adjusting sample periods, controlling industry-by-year fixed effects and adopting alternative sample treatments. The results suggest that curbing excessive corporate financialization, optimizing long-term R&D financing and improving external information governance are essential conditions to raise the quality of innovation investment in the manufacturing sector.