Shangkun Liang , Yuhao Niu , Sichao Wang , Chun Yuan
{"title":"Overseas operations and corporate financial asset allocation","authors":"Shangkun Liang , Yuhao Niu , Sichao Wang , Chun Yuan","doi":"10.1016/j.cjar.2024.100388","DOIUrl":null,"url":null,"abstract":"<div><div>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.</div></div>","PeriodicalId":45688,"journal":{"name":"China Journal of Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.9000,"publicationDate":"2024-08-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"China Journal of Accounting Research","FirstCategoryId":"1085","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1755309124000467","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
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.
期刊介绍:
The focus of the China Journal of Accounting Research is to publish theoretical and empirical research papers that use contemporary research methodologies to investigate issues about accounting, corporate finance, auditing and corporate governance in the Greater China region, countries related to the Belt and Road Initiative, and other emerging and developed markets. The Journal encourages the applications of economic and sociological theories to analyze and explain accounting issues within the legal and institutional framework, and to explore accounting issues under different capital markets accurately and succinctly. The published research articles of the Journal will enable scholars to extract relevant issues about accounting, corporate finance, auditing and corporate governance related to the capital markets and institutional environment.