Hoarding Bad News: When Non-financial Firms Hold Financial Assets

The Financial Assets of Non-Financial Firms

SSRN Electronic Journal ◽

10.2139/ssrn.3543802 ◽

2020 ◽

Author(s):

Olivier Darmouni ◽

Lira Mota

Keyword(s):

Financial Assets ◽

Financial Firms

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The financialisation–offshoring nexus and the capital accumulation of US non-financial firms

Cambridge Journal of Economics ◽

10.1093/cje/bey058 ◽

2019 ◽

Vol 43 (5) ◽

pp. 1183-1218 ◽

Cited By ~ 4

Author(s):

Tristan Auvray ◽

Joel Rabinovich

Keyword(s):

Financial Markets ◽

Value Chain ◽

Capital Accumulation ◽

Global Value Chains ◽

Value Chains ◽

Global Value Chain ◽

Financial Assets ◽

Financial Firms ◽

Productive Activities ◽

Panel Regressions

Abstract The financialisation of non-financial corporations has drawn the attention of many scholars who have identified two main channels through which financialisation occurs: a higher proportion of financial assets compared to non-financial ones and a higher amount of resources diverted to financial markets. A consequence of this process is a decrease in investment. Parallel to financialisation, many non-financial corporations have also engaged in an internationalisation of their productive activities, organising them under global value chains. Though offshoring may also explain the decrease in the level of investment of non-financial firms, the intersections between the literature on financialisation and the literature on global value chain remain surprisingly underdeveloped. This paper contributes to fill this gap using panel regressions for US non-financial corporations between 1995 and 2011. We find evidence that both offshoring and financialisation are determinants to the decrease in investment and that financialisation occurs mainly among firms belonging to sectors prone to offshoring.

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