The Effect Corporate Financialization on Operational Risk: The Moderating Role of Financial Constraints, Underinvestment and Product Market Competition
Year: 2026
Type: article
Abstract: corporate financialization includes two aspects, the first aspect states that financial investment by non-financial companies increases financial returns. The second aspect expresses the fact that financial markets have increased the pressure on the management of non-financial companies. The argument of "maximizing shareholder value" suggests that this increased pressure has led to an increasing transfer of resources from non-financial companies to financial markets in the payment of dividends, dividends, and share buybacks, and has had an impact on the risks faced by the company. Therefore, the aim of the current research is to investigate the effect of corporate financialization on operational risk with the moderating role of financial constraints, underinvestment and product market competition in companies listed on the Tehran Stock Exchange. To achieve the objectives of the research, 120 companies were investigated for the period of 2016 to 2021. To test the hypotheses of the research, a combined data approach using the panel data method was used. The findings show that there is a positive and significant relationship between the corporate financialization and the operational risk, which shows that the effect of strengthening the risk caused by the corporate financialization is dominant, and this effect is more evident among companies with more financing constraints. The findings show that corporate financialization cannot reduce underinvestment by using the "reservoir" effect of capital, but it leads to an increase in operational risk by harming the profitability of the firm. In addition, the results showed that competition in the product market reduces the effect of strengthening the risk caused by the corporate financialization.
Author: Saeed Anvarkhatibi
Institution: Islamic Azad University of Tabriz
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W7213673288
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