An Empirical Study on the Impact of Financialization on Financial Flexibility of Retail Enterprises from a Life-Cycle Perspective

Abstract

As operating costs continue to rise, an increasing number of retail enterprises invest in financial assets. This financialization behavior has different effects on the financial flexibility of retail firms at different stages of the corporate life cycle. Using financial data for A-share listed retail enterprises from 2016 to 2022, this paper identifies the life-cycle stages of retail firms and examines the impact of retail enterprise financialization on financial flexibility. The results show that financialization has a significant negative effect on financial flexibility. From the growth stage to the maturity stage and then to the turbulence stage, the negative effect of financialization on financial flexibility follows a U-shaped pattern. However, for firms in the decline stage, financialization has a significant positive effect on financial flexibility. In addition, the negative effect of financialization on financial flexibility is more significant for retail firms located in the eastern and central regions and for non-state-owned retail firms.