Discussion on the spread way of enterprises transformation from real economy to virtual economy: based on the perspective of peer effects
【Abstract】In recent years, more and more non-financial enterprises have invested a large amount of capital in financial assets and resulted in an obvious trend of transforming from real economy to virtual economy in China, which has attracted continuous attention from the government and academia. Existing studies usually assume that enterprises’ financialization decisions are independent of other enterprises, while little literature considers the interaction between different enterprises’ financialization decisions, that is, the contagion effect of enterprises’ financialization behaviors. Using the data of Chinese listed firms from 2001 to 2016, this paper investigated the existence, mechanism and economic consequences of the contagion effect of financialization behaviors based on the perspective of peer effects. This paper concluded that it is a significant contagion effect in the financialization decision of enterprises, and the degree of financialization is significantly positively correlated with the average degree of financialization of other enterprises in the same industry or province. To overcome endogeneity, we employed an instrumental variable approach based on peer firms’ average stock idiosyncratic returns and idiosyncratic volatility. Our results are still robust even after controlling endogeneity. Besides, our results are also robust by conducting a series of other robust tests. Furthermore, we explored the motivation of financialization peer effects from three aspects, namely, information learning, maintaining competitive balance and reducing agency cost. The results showed that the motivation of information learning and agency cost is the potential reasons driving the financialization peer effect of enterprises. Specifically, follower enterprises with information disadvantages are inclined to imitate the financialization behavior of leader enterprises with information advantages in the same industry and province, otherwise, it is not true. The peer effect of financialization is more pronounced among enterprises that face environment with a higher degree of information asymmetry and a higher degree of uncertainty. And the peer effect of financialization of enterprises with higher agency cost (state-owned enterprises or enterprises with more serious director corruption) will be stronger. In addition, we examined the economic consequences of enterprise financialization peer effects, and found that the financialization based on peer effects reduces the idiosyncratic risk of enterprises while increases the systemic risk and the total risk. The main contributions of this paper are as follows. (1) It provides a new microscopic perspective for understanding the occurrence and strengthening the mechanism of transformation from real economy to virtual economy in China. (2) It expands the literature on enterprise financialization. (3) It enriches the research on the peer effect of financial decision-making.
【Keywords】 transformation from real economy to virtual economy; financialization; peer effects; imitation;