The Effect of Managerial Ownership on Corporate Financialization with the Moderating Role of Corporate Technological Innovation
Keywords:
managerial ownership; corporate financialization; technological innovation; panel data; Tehran Stock Exchange.Abstract
Purpose: Financialization refers to a process in which firms increasingly prioritize financial activities, such as trading in financial markets, engaging in mergers and acquisitions, and holding financial assets, over traditional business operations such as production and innovation. The present study aims to investigate the impact of managerial ownership on corporate financialization, with the moderating role of corporate technological innovation.
Methodology: This study is applied in terms of purpose and correlational in nature. From a methodological perspective, it is a causal (ex post facto) study. The statistical sample consisted of 120 firms listed on the Tehran Stock Exchange during the period 2016–2023. Panel data regression analysis was employed to test the research hypotheses.
Findings: The results indicate that managerial ownership has a significant negative effect on corporate financialization. Furthermore, corporate technological innovation weakens the negative relationship between managerial ownership and corporate financialization.
Conclusion: An increase in managerial ownership tends to constrain corporate financialization. Managers, motivated by self-interest and strategic positioning, are more likely to invest in physical assets to maximize their private benefits. However, technological innovation can moderate the negative association between managerial ownership and financialization. As firms adopt innovative technologies and new technological orientations, managers are encouraged to direct organizational processes more effectively. Consequently, they become more receptive to financialization activities that may contribute to improving firm performance and competitiveness.
Keywords: Managerial Ownership; Corporate Financialization; Technological Innovation.
Downloads
References
Amore, M. D., Schneider, C., & Zaldokas, A. (2013). Credit supply and corporate innovation. Journal of Financial Economics, 109(3), 835-855.
Baradaran Hasanzadeh, R., & Taghizadeh Khanghah, V. (2023). The moderating role of internal controls in the effect of corporate financialization on financial fraud. Proceedings of the 21st National Accounting Conference of Iran and the 3rd International Accounting Conference of Iran, Tabriz, Iran. [In Persian]
Chang, X., Fu, K., Low, A., & Zhang, W. (2019). Non-executive employee stock options and corporate innovation. Journal of Financial Economics, 115(1), 168-188.
Chen, C., Wang, T., & Jia, X. (2023a). Short-termism in financial decision-making: Uncovering the influence of managerial myopia on corporate financial asset allocation through MD&A textual analysis. International Review of Financial Analysis, 90, 102900. https://doi.org/10.1016/j.irfa.2023.102900
Chen, Y., Shen, B., Cao, Y., & Wang, S. (2023b). CEO social capital, financing constraints and corporate financialisation: Evidence from Chinese listed companies. Finance Research Letters, 58, 104456.
Colombo, M. G., Guerci, M., & Rovelli, P. (2022). The effects of firm financialization on human resource management: How financialization affects the design of managerial jobs. Human Resource Management Journal, 32(3), 647-663.
Feng, Y., Yao, S., Wang, C., Liao, J., & Cheng, F. (2022). Diversification and financialization of non-financial corporations: Evidence from China. Emerging Markets Review, 50, 100834.
Gong, C., Gong, P., & Jiang, M. (2023). Corporate financialization and investment efficiency: Evidence from China. Pacific-Basin Finance Journal, 79, 101970.
Hsu, P.-H., Tian, X., & Xu, Y. (2014). Financial development and innovation: Cross-country evidence. Journal of Financial Economics, 112(1), 116-135.
Kang, D., Xu, J., Tong, Q., & Li, J. (2025). CEO financial background and corporate financialization. Finance Research Letters, 71, 106362.
Lee, Y. S., Kim, H. S., & Joo, S. H. (2020). Financialization and innovation short-termism in OECD countries. Review of Radical Political Economics, 52(2), 259-286.
Leng, T., Liu, Y., Xiao, Y., & Hou, C. (2023). Does firm financialization affect optimal real investment decisions? Evidence from China. Pacific-Basin Finance Journal, 79, 101970. https://doi.org/10.1016/j.pacfin.2023.101970
Li, H., Wang, Y., & Zhang, H. (2023a). How does family exit affect family business financialization? Finance Research Letters, 58, 104449. https://doi.org/10.1016/j.frl.2023.104449
Li, W., Chen, L., & He, S. (2023b). The effect of enterprise financialization on green innovation: Evidence from Chinese A-share non-financial listed enterprises. Environmental Science and Pollution Research, 30, 56802-56817.
Li, Z., & Yi, S. (2021). The impact of entity enterprise financialization on enterprise innovation investment: An analysis based on regulatory effect. Jiangxi Social Sciences, 41, 43-57.
Maaboudi, R., & Nazari Dareh, Z. (2022). The impact of financialization on environmental pollution in Iran. Quarterly Journal of New Economy and Trade, 17(2), 153-179. [In Persian]
Rabiei, K., & Mahdianpour, M. (2025). The effect of corporate financialization on investment efficiency based on the moderating role of financing constraints in companies listed on the Tehran Stock Exchange. Financial Management Strategy, 13(49), 157-178. [In Persian]
Orhangazi, O. (2008). Financialisation and capital accumulation in the non-financial corporate sector: A theoretical and empirical investigation on the U.S. economy, 1973-2003. Cambridge Journal of Economics, 32(6), 863-886.
Qi, B., & Fang, P. (2023). Dynamic changes in corporate financialization during CEO tenure. Finance Research Letters, 58, 104456.
Sen, S., & Dasgupta, Z. (2018). Financialisation and corporate investments: The Indian case. Review of Keynesian Economics, 6(1), 96-113.
Wang, C. (2019). A literature review on corporate financialization. American Journal of Industrial and Business Management, 9(3), 647-657.
Xu, M., Albitar, K., & Li, Z. (2020). Does corporate financialization affect EVA? Early evidence from China. Green Finance, 2(4), 392-408.
Xue, L., Chen, C., Wang, N., & Zhang, L. (2023). Gambling culture and corporate financialization: Evidence from China's welfare lottery sales. Pacific-Basin Finance Journal, 78, 101939.
Zhang, C., & Zhang, B. (2016). The falling real investment puzzle: A view from financialization. Economic Research Journal, 51(12), 32-46.
Zhang, M., Li, W., Luo, Y., & Chen, W. (2023). Government audit supervision, financialization, and executives' excess perks: Evidence from Chinese state-owned enterprises. International Review of Financial Analysis, 89, 102716.
Zhao, Y., & Su, K. (2022). Economic policy uncertainty and corporate financialization: Evidence from China. International Review of Financial Analysis, 82, 102182. https://doi.org/10.1016/j.irfa.2022.102182
Zhou, Z., Xu, L., Guo, P., & Ai, H. (2023). Environmental regulation and corporate financialization: Insight from Blue Sky Protection Campaign in China. Environmental Science and Pollution Research, 30, 54993-55008.
